<PAGE> 1
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K/A
AMENDMENT NO. 1
CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
DATE OF REPORT -- NOVEMBER 12, 1999
COMMISSION FILE NUMBER 1-6780
RAYONIER INC.
Incorporated in the State of North Carolina
I.R.S. Employer Identification Number 13-2607329
1177 Summer Street, Stamford, Connecticut 06905-5529
(Principal Executive Office)
Telephone Number: (203) 348-7000
<PAGE> 2
RAYONIER INC.
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
Item 2 Acquisition of Assets 1
Item 7 Financial Statements and Exhibits 1
Audited Financial Statements of Smurfit Timberlands Operations
(A Business Unit of Jefferson Smurfit Corporation (U.S.))
Report of Independent Auditors 2
Balance Sheets at December 31, 1998 and 1997 3
Statements of Income for the Years Ended December 31, 1998,
1997 and 1996 4
Statements of Cash Flows for the Years Ended December 31, 1998,
1997 and 1996 5
Notes to Financial Statements 6-13
Unaudited Financial Statements of Smurfit Timberlands Operations
(A Business Unit of Jefferson Smurfit Corporation (U.S.))
Balance Sheet at June 30, 1999 14
Statements of Income for the Six Months Ended June 30, 1999
and 1998 15
Statements of Cash Flows for the Six Months Ended June 30, 1999
and 1998 16
Pro Forma Financial Information:
Introduction to Unaudited Pro Forma Condensed Combined Financial
Statements 17
Unaudited Pro Forma Condensed Combined Balance Sheet at
June 30, 1999 18
Unaudited Pro Forma Condensed Combined Statement of Income for
the Year Ended December 31, 1998 19
Unaudited Pro Forma Condensed Combined Statement of Income for
the Six Months Ended June 30, 1999 20
Notes to Unaudited Pro Forma Condensed Combined Financial
Statements 21
Signature 22
Exhibit Index 23
</TABLE>
i
<PAGE> 3
ITEM 2. ACQUISITION OF ASSETS
On October 25, 1999 the Registrant acquired approximately 969,000 owned and
leased acres of timberland in Georgia, Florida and Alabama from Jefferson
Smurfit Corporation (U.S.) ("JSC (U.S)") in a business combination to be
accounted for by the purchase method of accounting. In addition, the Registrant
and JSC (U.S.) entered into a Timber Cutting Agreement whereby the Registrant
has agreed to supply at market prices a portion of JSC (U.S.) wood supply
requirements for the years 2000 and 2001 at its facilities in Fernandina Beach,
Florida and Brewton, Alabama. The purchase price of approximately $710 million
was financed by $485 million in installment notes issued to JSC (U.S.) and $225
million in cash under a bank credit facility underwritten by Credit Suisse
First Boston and Morgan Stanley Senior Funding, Inc. JSC (U.S.) used these
timberlands primarily to provide pulpwood fiber to its paperboard mills. The
Registrant plans to manage the timberlands and sell standing timber on an
open-market basis through Rayonier Timberlands Operating Company, L.P., a
wholly-owned limited partnership.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial Statements of Business Acquired:
Audited Financial Statements of Smurfit Timberlands Operations (A
Business Unit of Jefferson Smurfit Corporation (U.S.))
Report of Independent Auditors
Balance Sheets at December 31, 1998 and 1997
Statements of Income for the Years Ended December 31, 1998, 1997
and 1996
Statements of Cash Flows for the Years Ended December 31,
1998, 1997 and 1996
Notes to Financial Statements
Unaudited Financial Statements of Smurfit Timberlands Operations
(A Business Unit of Jefferson Smurfit Corporation (U.S.))
Balance Sheet at June 30, 1999
Statements of Income for the Six Months Ended June 30, 1999 and
1998
Statements of Cash Flows for the Six Months Ended June 30,
1999 and 1998
(b) Pro Forma Financial Information:
Introduction to Unaudited Pro Forma Condensed Combined Financial
Statements
Unaudited Pro Forma Condensed Combined Balance Sheet at June 30,
1999
Unaudited Pro Forma Condensed Combined Statement of Income for the
Year Ended December 31, 1998
Unaudited Pro Forma Condensed Combined Statement of Income for the
Six Months Ended June 30, 1999
Notes to Unaudited Pro Forma Condensed Combined Financial
Statements
(c) See Exhibit Index
1
<PAGE> 4
REPORT OF INDEPENDENT AUDITORS
Board of Directors
Jefferson Smurfit Corporation (U.S.)
We have audited the accompanying balance sheets of Smurfit Timberlands
Operations, a business unit of Jefferson Smurfit Corporation (U.S.), as of
December 31, 1998 and 1997, and the related statements of income and cash flows
for each of the three years in the period ended December 31, 1998. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Smurfit Timberlands Operations
at December 31, 1998 and 1997, and the results of its operations and its cash
flows for each of the three years in the period ended December 31, 1998, in
conformity with generally accepted accounting principles.
/s/Ernst & Young LLP
September 15, 1999,
except for Note 8,
as to which the
date is October 25,1999
St. Louis, Missouri
2
<PAGE> 5
SMURFIT TIMBERLANDS OPERATIONS
(A BUSINESS UNIT OF JEFFERSON SMURFIT CORPORATION (U.S.))
BALANCE SHEETS
<TABLE>
<CAPTION>
DECEMBER 31
1998 1997
-------- --------
(In thousands)
<S> <C> <C>
ASSETS
Timberlands:
Land $140,721 $140,773
Standing timber 125,867 125,002
Other 4,733 3,906
-------- --------
271,321 269,681
Other assets 1,759 1,822
-------- --------
Total assets $273,080 $271,503
======== ========
LIABILITIES AND JEFFERSON SMURFIT CORPORATION (U.S.) INVESTMENT
Accounts payable $ 304 $ 812
Accrued liabilities 2,008 1,424
Deferred income taxes 24,955 25,211
Jefferson Smurfit Corporation (U.S.) investment 245,813 244,056
-------- --------
Total liabilities and Jefferson Smurfit Corporation (U.S.)
investment $273,080 $271,503
======== ========
</TABLE>
See accompanying notes.
3
<PAGE> 6
SMURFIT TIMBERLANDS OPERATIONS
(A BUSINESS UNIT OF JEFFERSON SMURFIT CORPORATION (U.S.))
STATEMENTS OF INCOME
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31
1998 1997 1996
------- ------- -------
(In thousands)
<S> <C> <C> <C>
Net sales:
Jefferson Smurfit Corporation (U.S.) $47,797 $45,559 $44,412
Third parties:
Delivered 33,925 35,003 38,478
Stumpage 6,922 8,167 5,723
------- ------- -------
88,644 88,729 88,613
Costs and expenses:
Cost of timber sold 46,812 47,184 48,439
Selling, general, and administrative 7,398 6,861 6,740
------- ------- -------
Operating income 34,434 34,684 33,434
Other income 2,743 3,136 2,742
------- ------- -------
Income before income taxes 37,177 37,820 36,176
Provision for income taxes 14,564 14,814 14,170
------- ------- -------
Net income $22,613 $23,006 $22,006
======= ======= =======
</TABLE>
See accompanying notes.
4
<PAGE> 7
SMURFIT TIMBERLANDS OPERATIONS
(A BUSINESS UNIT OF JEFFERSON SMURFIT CORPORATION (U.S.))
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31
1998 1997 1996
-------- -------- --------
(In thousands)
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 22,613 $ 23,006 $ 22,006
Adjustments to reconcile net income to net cash
provided by operating activities:
Cost of timber harvested 7,241 7,405 7,756
Deferred income taxes (257) (1,223) (870)
Gain on sale of timber and timberlands (130) (543) (24)
Changes in other assets and liabilities:
Other assets 64 138 (94)
Accounts payable and accrued liabilities 76 419 (92)
-------- -------- --------
Net cash provided by operating activities 29,607 29,202 28,682
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of timber and timberlands (8,909) (18,839) (10,267)
Proceeds from sale of timberlands 158 689 108
-------- -------- --------
Net cash used for investing activities (8,751) (18,150) (10,159)
CASH FLOWS FROM FINANCING ACTIVITIES
Net advances to Jefferson Smurfit Corporation
(U.S.) (20,856) (11,052) (18,523)
-------- -------- --------
Net cash used for financing activities (20,856) (11,052) (18,523)
-------- -------- --------
Increase in cash -- -- --
Cash at beginning of year -- -- --
-------- -------- --------
Cash at end of year $ -- $ -- $ --
======== ======== ========
</TABLE>
See accompanying notes
5
<PAGE> 8
SMURFIT TIMBERLANDS OPERATIONS
(A BUSINESS UNIT OF JEFFERSON SMURFIT CORPORATION (U.S.))
NOTES TO FINANCIAL STATEMENTS
(Tabular amounts in thousands)
DECEMBER 31, 1998
1. SIGNIFICANT ACCOUNTING POLICIES
DESCRIPTION OF SMURFIT TIMBERLANDS OPERATIONS AND BASIS OF PRESENTATION
Smurfit Timberlands Operations (the Company) as it is referred to in these
financial statements is the wholly owned timberlands management operations of
the Forestry Resources Division (the Division) of Jefferson Smurfit Corporation
(U.S.) (JSC (U.S.)). JSC (U.S.) is an indirect wholly owned subsidiary of
Smurfit-Stone Container Corporation (SSCC).
JSC (U.S.)'s major operations are in paper products, recycled and renewable
fiber resources, and consumer and specialty packaging. JSC (U.S.)'s paperboard
mills purchase pulpwood and recycled fiber and produce paperboard for conversion
into corrugated containers, folding cartons, and industrial packaging.
The Division's operations include (1) the operations of the Company, (2) a
procurement function for JSC (U.S.) paperboard mills, and (3) other operations
consisting of a cypress sawmill, silvicultural nursery, and seedling farms.
The Company is engaged in the growing and selling of timber harvested from
approximately 950,000 acres of timberland owned or leased (under long-term
leases) in the southeastern portion of the United States. The timber harvested
is sold primarily to JSC (U.S.) paperboard mills located in Jacksonville,
Florida; Fernandina Beach, Florida; and Brewton, Alabama. Approximately 30
percent of the pulpwood fiber requirements of the JSC (U.S.) paperboard mills
are harvested by the Company. The Company operates in one reportable business
segment.
The Company is an integral part of the Division and does not constitute a
separate legal entity. The financial statements of the Company present the
operating results and the financial position of the timberlands management
operations and do not include the pulpwood procurement function and the other
operations of the Division.
The financial statements of the Company have been prepared for the purpose of
complying with the rules and regulations of the Securities and Exchange
Commission for inclusion in a Form 8-K to be filed by Rayonier, Inc.
in connection with its acquisition of the Company as described in Note 8.
These financial statements have been prepared from the historical accounting
records of JSC (U.S.) and reflect the application of management and allocation
policies adopted by JSC (U.S.) for various costs and activities, as described in
Note 2. All of the accounting judgments, estimations, and allocations in these
financial statements are based on assumptions that JSC (U.S.) management
believes are reasonable for purposes of preparing the Company's financial
statements. However, these allocations and estimates are not necessarily
indicative of the costs that would have resulted if the Company had been
operated as a separate entity.
CASH
The Company's cash is centralized with JSC (U.S.), and the Company transmits all
available cash to JSC (U.S.) on a daily basis.
6
<PAGE> 9
SMURFIT TIMBERLANDS OPERATIONS
(A BUSINESS UNIT OF JEFFERSON SMURFIT CORPORATION (U.S.))
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
TIMBER AND TIMBERLANDS
Timber and timberlands are stated at the lower of cost, net of timber cost
depletion, or market value. The Company capitalizes timber and timberland
purchases, logging roads and bridges, and stand establishment costs. The portion
of the costs of timberland attributed to the purchase or establishment of
standing timber is recognized as depletion expense as timber is cut, at rates
determined annually, based on the relationship of unamortized timber costs to
the estimated volume of recoverable timber. The Company estimates the volume of
recoverable timber using statistical information and data obtained from physical
measurements, site maps, and other information-gathering techniques.
The cost of establishing timber stands includes site preparation, seedlings,
planting, and initial applications of herbicides and fertilizer. The cost of
contractual reforestation obligations for leased land is recognized in depletion
expense during the final harvesting rotation. Timberland carrying costs are
expensed as incurred.
From time to time the Company exchanges timber and timberlands with third
parties in nonmonetary transactions. No gain or loss is reflected in these
exchanges. Timber and timberlands with a carrying value of $640,000, $0, and
$161,000 were exchanged in 1998, 1997, and 1996, respectively.
PROPERTY, PLANT, AND EQUIPMENT
The Company utilizes property, plant, and equipment of the Division and does not
own any property, plant, or equipment of its own. Consequently, depreciation has
been allocated to the Company for purposes of these financial statements. The
Division provides for depreciation of its property, plant, and equipment using
the straight-line method with estimated lives ranging from 5 to 40 years.
In accordance with Statement of Financial Accounting Standards (SFAS) No. 121,
"Accounting for the Impairment of Long-lived Assets and for Long-lived Assets to
Be Disposed Of," long-lived assets held and used by the Division are reviewed
for impairment whenever events or changes in circumstances indicate that the
carrying amount of an asset may not be recoverable.
INCOME TAXES
The taxable income of the Company is included in the consolidated federal and
state income tax returns filed by JSC (U.S.). The Company's income tax
provisions are computed on a separate return basis and are paid to JSC (U.S.).
JSC (U.S.) uses the liability method of accounting for deferred income taxes.
Deferred income taxes in these financial statements are recognized for all
temporary differences between the tax and financial reporting bases of the
Company's assets and liabilities based on enacted tax laws and statutory tax
rates applicable to the periods in which the differences are expected to affect
taxable income.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
7
<PAGE> 10
SMURFIT TIMBERLANDS OPERATIONS
(A BUSINESS UNIT OF JEFFERSON SMURFIT CORPORATION (U.S.))
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
REVENUE RECOGNITION
Revenue is recognized on timber sales to JSC (U.S.) when pulpwood is delivered
to the mill facility. Sales prices are based primarily on prevailing market
prices on a geographic basis as determined by Division management.
Revenue is recognized on timber sales to third party customers when legal
ownership of the timber and the related risk of loss pass to the customer and
the quantity sold is determinable. These timber sales occur when stumpage or
standing timber is sold or when harvested timber is delivered to the third-party
customer in a delivered sale agreement.
2. RELATED PARTY TRANSACTIONS
Transactions with JSC (U.S.) and affiliates for the years ended December 31 were
as follows:
<TABLE>
<CAPTION>
1998 1997 1996
------- ------- -------
<S> <C> <C> <C>
Product sales to JSC (U.S.) $47,797 $45,559 $44,412
General management services fee paid 556 505 459
Common corporate service costs allocated
to the Company:
Workers' compensation 22 22 51
General liability and loss insurance 69 116 145
Employee benefits:
Medical 344 377 466
Pension 65 106 107
Postretirement medical 83 47 66
401(k) 100 100 85
------- ------- -------
683 768 920
Common Division service costs allocated to the Company:
Salaries 3,985 3,738 3,477
Other operating expenses 2,174 1,850 1,884
------- ------- -------
6,159 5,588 5,361
</TABLE>
Product sales to JSC (U.S.) relate to the sale of timber harvested from land
owned or leased by the Company. These sales are consummated on terms similar to
those with unrelated third parties.
JSC (U.S.) provides general management services to the Company which include
information systems, treasury, accounting, human resources, tax, risk
management, certain legal services, internal audit, and other indirect
administrative functions. In consideration for these management services, the
Company is allocated a portion of JSC (U.S.)'s actual costs on an established
formula. The formula is based upon the Company's utilization of the Division's
employees, property, plant, and equipment and the Company's contribution of net
sales to total sales of the Division.
8
<PAGE> 11
SMURFIT TIMBERLANDS OPERATIONS
(A BUSINESS UNIT OF JEFFERSON SMURFIT CORPORATION (U.S.))
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
In addition to management services, JSC (U.S.) allocates certain common costs to
the Company which include insurance and other employee benefits costs. These
include the cost to participate in a noncontributory defined benefit pension
plan and health care and life insurance benefit plans all sponsored by JSC
(U.S.). They also include the cost of matching employee contributions in a
voluntary savings plan offered by JSC (U.S.) for which the match contribution is
made in SSCC common stock. Since the personnel utilized by the Company are part
of the overall JSC (U.S.) employee benefit plans, the benefit obligation, plan
assets, and funded status under these plans are reflected by JSC (U.S.) and are
not reflected in these financial statements.
In addition to common costs described above, the Division provides certain
common services to the Company which are comprised of both direct expenses and
allocated administrative expenses. The direct expenses include lease payments,
property taxes, and other direct expenses related to growing and selling timber
and are separately identified and charged to the Company based on actual costs
incurred. The administrative expenses include salaries of Division personnel and
general overhead costs of the Division which are allocated to the Company on an
established formula based upon utilization of the Division's employees.
The general management service fee and the corporate and Division common service
costs allocated to the Company are not necessarily indicative of the costs that
would have been incurred if the Company were operated as a stand-alone business.
9
<PAGE> 12
SMURFIT TIMBERLANDS OPERATIONS
(A BUSINESS UNIT OF JEFFERSON SMURFIT CORPORATION (U.S.))
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
3. JSC (U.S.) INVESTMENT
JSC (U.S.) utilizes a centralized cash management system whereby the Company's
cash requirements are provided directly by JSC (U.S.). Similarly, cash generated
by the Company is remitted directly to JSC (U.S.). All charges and allocations
of costs for functions and services provided by JSC (U.S.) and the Division, as
described in Note 2, are deemed paid by the Company, in cash, in the period in
which the cost is recorded in these financial statements. Intercompany balances
with JSC (U.S.) and the Division, net of any settlements, are included in the
JSC (U.S.) investment.
JSC (U.S.) does not have indebtedness directly attributable to the assets of the
Company. Accordingly, no debt of JSC (U.S.) or related interest expense has been
allocated to the Company. The Company's assets are included in the general
assets of JSC (U.S.) and its subsidiaries and are pledged as collateral for the
JSC (U.S.) bank credit facility which includes approximately $1.3 billion in
term loans outstanding and $550 million in an outstanding revolving credit
agreement.
Changes in the JSC (U.S.) investment were as follows:
<TABLE>
<S> <C>
Balance at December 31, 1995 $ 228,619
Net income 22,006
Net advances to JSC (U.S.) (18,523)
---------
Balance at December 31, 1996 232,102
Net income 23,006
Net advances to JSC (U.S.) (11,052)
---------
Balance at December 31, 1997 244,056
Net income 22,613
Net advances to JSC (U.S.) (20,856)
---------
Balance at December 31, 1998 $ 245,813
=========
</TABLE>
4. INCOME TAXES
The Company's taxable income is included in the consolidated income tax returns
of JSC (U.S.). The income tax provision and deferred tax accounts appearing in
the accompanying financial statements reflect the results of the Company on a
stand-alone basis.
The Company's deferred tax liabilities at December 31, 1998 and 1997, primarily
consist of temporary differences relating to depletion expense for book and tax
purposes. The Company's other deferred tax liabilities and deferred tax assets
are not significant.
Provisions for income taxes for the years ended December 31 were as follows:
<TABLE>
<CAPTION>
1998 1997 1996
-------- -------- --------
<S> <C> <C> <C>
Current $ 14,821 $ 16,036 $ 15,040
Deferred (credit) (257) (1,222) (870)
-------- -------- --------
$ 14,564 $ 14,814 $ 14,170
======== ======== ========
</TABLE>
10
<PAGE> 13
SMURFIT TIMBERLANDS OPERATIONS
(A BUSINESS UNIT OF JEFFERSON SMURFIT CORPORATION (U.S.))
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
Reconciliations of the differences between the statutory federal income tax
rates and the effective income tax rates as a percentage of income before income
taxes are as follows:
<TABLE>
<CAPTION>
1998 1997 1996
---- ---- ----
<S> <C> <C> <C>
U.S. federal statutory rate 35% 35% 35%
State and local taxes, net of federal tax benefit 4% 4% 4%
---- ---- ----
39% 39% 39%
==== ==== ====
</TABLE>
Included in intercompany settlements with JSC (U.S.) are income tax amounts of
$14,821,000, $16,036,000, and $15,040,000 in 1998, 1997, and 1996, respectively.
5. LEASES
The Company leases timberland for the purpose of establishing and growing timber
under long-term leases which range in length from 30 to 65 years. Future minimum
lease payments at December 31, 1998 required under operating leases that have
initial or remaining noncancelable lease terms in excess of one year are as
follows:
<TABLE>
<S> <C>
1999 $ 3,085
2000 2,975
2001 2,975
2002 2,853
2003 2,758
Thereafter 61,221
-------------------
$75,867
===================
</TABLE>
Rental expense was $3,117,000, $3,224,000, and $3,220,000 for the years ended
December 31, 1998, 1997, and 1996, respectively.
The noncancelable leases are adjusted annually based on changes in published
indices. The aggregate adjustments (increases or decreases) for these leases
during 1998, 1997, and 1996 were 2 percent, 1 percent, and 1 percent,
respectively. Certain lease agreements include obligations to reforest the land
prior to the termination of the lease.
The Company has renewal options for many of the leases which permit the Company
to renew these leases for periods ranging from 1 to 20 years.
6. COMMITMENTS AND CONTINGENCIES
The Company is a defendant in a number of lawsuits and claims arising out of the
conduct of its business, including those related to environmental matters. While
the ultimate results of such suits or other proceedings against the Company
cannot be predicted with certainty, the management of the Company believes that
the resolution of these matters will not have a material adverse effect on its
financial condition or results of operations.
11
<PAGE> 14
SMURFIT TIMBERLANDS OPERATIONS
(A BUSINESS UNIT OF JEFFERSON SMURFIT CORPORATION (U.S.))
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
FACTORS AFFECTING SUPPLY AND DEMAND
The demand for the Company's timber has been and in the future can be expected
to be subject to cyclical fluctuations. Such demand is primarily affected by the
level of housing starts, repair and remodeling activity, industrial wood product
use, competition from nonwood products, the demand for pulp and paper products,
and the land use management policies of the U.S. government. These factors are
subject to fluctuations due to changes in economic conditions, interest rates,
population growth, weather conditions, competitive pressures, and other factors.
Any decrease in the level of industry demand for wood products generally can be
expected to result in lower net sales, operating income, and cash flow of the
Company.
HARVESTING LIMITATIONS
Weather conditions, timber growth cycles, access limitations, and regulatory
requirements associated with the protection of wildlife and water resources may
restrict harvesting of the Company's timberlands. Timber harvests also may be
affected by various natural factors, including damage by fire, insect
infestation, disease, prolonged drought, severe weather conditions, and other
causes. Although damage from such natural causes usually is localized and
affects only a limited percentage of the timber, there can be no assurance that
any damage affecting the Company's timberlands will in fact be so limited.
Consistent with industry practice, the Company does not maintain insurance
coverage with respect to damage to its timberlands. Any of the above factors
that materially limit the ability of purchasers or the Company to harvest timber
could have a material adverse impact on the net sales, operating income, and
cash flow of the Company.
ENVIRONMENTAL REGULATION
The Company's past and present operations include activities which are subject
to federal, state, and local environmental requirements, particularly those
relating to air and water quality, which are expected to become more stringent
in the future. The Company faces potential environmental liability as a result
of violations of permit terms and similar authorizations that have occurred from
time to time at its facilities.
Certain environmental statutes impose strict liability, rendering a person
liable for environmental damage without regard to negligence or fault on the
part of such person. There can be no assurance that such laws or future
legislation or administrative or judicial action with respect to protection of
the environment will not adversely affect the Company.
The Endangered Species Act (the ESA) and counterpart state legislations protect
species threatened with possible extinction. Species indigenous to the Company's
timberlands have been and in the future may be protected under these laws.
Protection of endangered and threatened species may include restrictions on
timber harvesting, road building, and other silviculture activities on private,
federal, and state land containing the affected species.
12
<PAGE> 15
SMURFIT TIMBERLANDS OPERATIONS
(A BUSINESS UNIT OF JEFFERSON SMURFIT CORPORATION (U.S.))
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
7. YEAR 2000 (UNAUDITED)
The Company utilizes information systems applications during the performance of
all of its production, accounting, and administrative processes which are owned
and operated by the Division and JSC (U.S.). These applications include a timber
accounting system used exclusively by the Division (and the Company) and a
general accounting system used by all wholly owned entities of JSC (U.S.). The
timber accounting system is used to record and monitor all harvesting activity
at the Company. The general accounting system is used by the Company to account
for payroll, payable, receivable, and fixed asset activity. The Company does not
maintain any separate information systems applications of its own.
Both the Division and JSC (U.S.) have developed plans to modify these systems
applications in order to address the year 2000 issue. The Division expects to
spend approximately $2 million to implement the new year 2000-compliant timber
accounting system, of which approximately $.6 million has been spent through
December 31, 1998. In September 1999, this wood settlement system was installed,
and the Division expects to complete the testing of this system in October 1999.
Also, JSC (U.S.) is in the process of implementing new accounting applications,
and these implementations are expected to be completed and tested by November
1999. The cost of implementing these systems will be borne by JSC (U.S.) and
allocated to each entity. The Division and JSC (U.S.) have also contacted their
major suppliers to determine the extent of their year 2000 compliance. Based on
the status of the system implementations and discussions with major suppliers,
management of the Division and JSC (U.S.) does not expect the year 2000
compliance issue to have an adverse impact on the financial condition or results
of operation of the Company.
In the unlikely event that the systems utilized by the Company do not become
year 2000- compliant prior to January 1, 2000, the Division and JSC (U.S.) have
established contingency plans to process information until those systems can be
adequately modified. The Division's contingency plans primarily consist of the
utilization of an affiliate's timber accounting system. JSC (U.S.)'s contingency
plans consist of utilizing various manual procedures to process information
currently processed by the general accounting system. Management of the Division
and JSC (U.S.) believe that these plans should prevent the year 2000 issue from
significantly impacting the financial results of the Company.
8. SUBSEQUENT EVENT
On October 25, 1999, JSC (U.S.) sold approximately 969,000 owned and leased
acres of timberland to Rayonier, Inc. for $710 million. As a part of the sales
agreement, JSC (U.S.) entered into a two-year supply contract with Rayonier,
Inc. to purchase 1.4 million tons of timber each year from Rayonier, Inc.
during 2000 and 2001 at prevailing market prices. In addition, JSC (U.S.) has
entered into separate service agreements with Rayonier, Inc. to supply it with
pine seedlings through December 31, 2001 and to provide certain site
preparation services to it from the date on which the sale is consummated
through December 31, 1999.
13
<PAGE> 16
SMURFIT TIMBERLANDS OPERATIONS
(A BUSINESS UNIT OF JEFFERSON SMURFIT CORPORATION (U.S.))
BALANCE SHEET
<TABLE>
<CAPTION>
(UNAUDITED)
JUNE 30,
1999
---------------------
(In thousands)
<S> <C>
ASSETS
Timberlands:
Land $ 140,721
Standing timber 126,478
Other 4,059
--------------------
271,258
Other assets 1,311
---------------------
Total assets $ 272,569
=====================
LIABILITIES AND JEFFERSON SMURFIT CORPORATION
(U.S.) INVESTMENT
Accounts payable $ 399
Accrued liabilities 3,181
Deferred revenue 2,029
Deferred income taxes 25,005
Jefferson Smurfit Corporation (U.S.) investment 241,955
---------------------
Total liabilities and Jefferson Smurfit Corporation
(U.S.) investment $ 272,569
=====================
</TABLE>
14
<PAGE> 17
SMURFIT TIMBERLANDS OPERATIONS
(A BUSINESS UNIT OF JEFFERSON SMURFIT CORPORATION (U.S.))
STATEMENTS OF INCOME
<TABLE>
<CAPTION>
(UNAUDITED)
SIX MONTHS ENDED JUNE 30,
1999 1998
------- -------
(In thousands)
<S> <C> <C>
Net Sales:
Jefferson Smurfit Corporation (U.S.) $16,973 $24,530
Third parties 20,231 21,155
------- -------
37,204 45,685
Costs and expenses:
Cost of timber sold 20,796 23,522
Selling, general & administrative 3,876 3,823
------- -------
Operating income 12,532 18,340
Other income 178 128
------- -------
Income before income taxes 12,710 18,468
Provision for income taxes 4,957 7,202
------- -------
Net income $ 7,753 $11,266
======= =======
</TABLE>
15
<PAGE> 18
SMURFIT TIMBERLANDS OPERATIONS
(A BUSINESS UNIT OF JEFFERSON SMURFIT CORPORATION (U.S.))
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
(UNAUDITED)
SIX MONTHS ENDED JUNE 30,
1999 1998
-------- --------
(In thousands)
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 7,753 $ 11,266
Adjustments to reconcile net income to net cash
provided by operating activities:
Cost of timber harvested 3,100 3,244
Deferred income taxes 50 (128)
Loss / (gain) on sale of timber and
timberlands 37 (45)
Changes in other assets and liabilities:
Other assets 448 357
Accounts payable, accrued liabilities
and deferred revenue 3,296 2,883
-------- --------
Net cash provided by operating activities 14,684 17,577
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of timber and timberlands (3,076) (3,271)
Proceeds from sale of timberlands 3 47
-------- --------
Net cash used for investing activities (3,073) (3,224)
CASH FLOWS FROM FINANCING ACTIVITIES
Net advances to Jefferson Smurfit Corporation
(U.S.) (11,611) (14,353)
-------- --------
Net cash used for financing activities (11,611) (14,353)
-------- --------
Increase in cash -- --
Cash at beginning of year -- --
-------- --------
Cash at end of year $ -- $ --
======== ========
</TABLE>
16
<PAGE> 19
RAYONIER INC.
INTRODUCTION TO UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION
----------------------------------------------------------------------------
The following Unaudited Pro Forma Condensed Combined Financial Statements give
effect to the acquisition by Rayonier Inc. ("Rayonier") of approximately 969,000
acres of timberland from Jefferson Smurfit Corporation (U.S) in a business
combination to be accounted for by the purchase method of accounting. The
Unaudited Pro Forma Condensed Combined Financial Statements are derived from the
historical financial statements of Rayonier and Smurfit Timberlands
Operations, ("Smurfit"), a business unit of Jefferson Smurfit Corporation
(U.S.).
The Unaudited Pro Forma Condensed Combined Balance Sheet gives effect to the
acquisition as if it had occurred on June 30, 1999. The Unaudited Pro Forma
Condensed Combined Statements of Income for the year ended December 31, 1998 and
for the six months ended June 30, 1999 give effect to the acquisition as if it
had occurred on January 1, 1998. The pro forma adjustments are based on certain
assumptions that management believes are reasonable under the circumstances.
The pro forma information is not necessarily indicative of the results that
would have been reported had such event actually occurred on the dates
specified, nor is it intended to project Rayonier's results of operations or
financial position for any future period or date. The information set forth
should be read in conjunction with Rayonier's audited financial statements for
the year ended December 31, 1998 included in the Company's Form 10-K Annual
Report, Rayonier's unaudited financial statements for the period ended June 30,
1999 included in the Company's Form 10-Q Quarterly Report and the financial
statements of Smurfit included elsewhere in this Form 8-K/A.
17
<PAGE> 20
RAYONIER INC.
UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET
AS OF JUNE 30, 1999
(Thousands of Dollars)
<TABLE>
<CAPTION>
HISTORICAL
------------------------------------------ PRO FORMA
RAYONIER SMURFIT COMBINED ADJUSTMENTS PRO FORMA
-------- ------- -------- ----------- ---------
<S> <C> <C> <C> <C> <C>
ASSETS
CURRENT ASSETS $ 280,573 $ -- $280,573 $ (3,820)(l) $ 276,753
OTHER ASSETS 82,532 1,311 83,843 (1,311)(a) 90,032
7,500 (b)
TIMBER, TIMBERLANDS AND
LOGGING ROADS, NET 544,807 271,258 816,065 445,242 (c) 1,261,307
PROPERTY, PLANT AND
EQUIPMENT, NET 680,945 -- 680,945 -- 680,945
---------- ---------- ---------- ---------- ----------
TOTAL ASSETS $1,588,857 $ 272,569 $1,861,426 $ 447,611 $2,309,037
========== ========== ========== ========== ==========
</TABLE>
<TABLE>
<S> <C> <C> <C> <C> <C>
LIABILITIES AND EQUITY
CURRENT LIABILITIES $ 184,336 $ 5,609 $ 189,945 $ (5,609)(a) $ 187,516
3,180 (j)
LONG-TERM DEBT 446,404 -- 446,404 717,000 (d) 1,163,404
OTHER NON-CURRENT LIABILITIES 306,798 25,005 331,803 (25,005)(a) 306,798
---------- --------- ---------- --------- -----------
TOTAL LIABILITIES 937,538 30,614 968,152 689,566 1,657,718
TOTAL EQUITY 651,319 241,955 893,274 (241,955)(a) 651,319
---------- --------- ---------- --------- -----------
TOTAL LIABILITIES AND EQUITY $1,588,857 $ 272,569 $1,861,426 $ 447,611 $2,309,037
========== ========= ========== ========= ===========
</TABLE>
The accompanying Notes to Unaudited Pro Forma Condensed Combined Financial
Statements are an integral part of these financial statements.
18
<PAGE> 21
RAYONIER INC.
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF INCOME
FOR THE YEAR ENDED DECEMBER 31, 1998
(THOUSANDS OF DOLLARS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
HISTORICAL
------------------------------------- PRO FORMA
RAYONIER SMURFIT COMBINED ADJUSTMENTS PRO FORMA
-------- ------- -------- ----------- ---------
<S> <C> <C> <C> <C> <C>
SALES $1,008,566 $88,644 $1,097,210 $(32,924) (e) $1,064,286
---------- ------- ---------- -------- ----------
COSTS AND EXPENSES
Cost of sales 852,483 46,812 899,295 35,169 (f) 895,305
(32,924) (e)
(6,235) (g)
Selling and general expenses 35,467 7,398 42,865 42,865
Other operating income, net (3,507) (2,743) (6,250) (6,250)
---------- ------- ---------- -------- ----------
884,443 51,467 935,910 (3,990) 931,920
---------- ------- ---------- -------- ----------
OPERATING INCOME 124,123 37,177 161,300 (28,934) 132,366
---------- ------- ---------- -------- ----------
MISCELLANEOUS INCOME 743 - 743 - 743
(1,111) (k)
INTEREST EXPENSE (34,712) - (34,712) (58,414) (h) (94,237)
---------- ------- ---------- -------- ----------
INCOME BEFORE INCOME TAXES 90,154 37,177 127,331 (88,459) 38,872
INCOME TAX EXPENSE (26,519) (14,564) (41,083) 32,730 (i) (8,353)
---------- ------- ---------- -------- ----------
NET INCOME $ 63,635 $22,613 $ 86,248 $(55,729) $ 30,519
========== ======= ========== ======== ==========
BASIC EARNINGS PER SHARE $ 2.26 $1.09
====== =====
DILUTED EARNINGS PER SHARE $ 2.22 $1.07
====== =====
WEIGHTED AVERAGE NUMBER
OF COMMON SHARES:
BASIC 28,118,402 28,118,402
========== ==========
DILUTED 28,608,551 28,608,551
========== ==========
</TABLE>
The accompanying Notes to Unaudited Pro Forma Condensed Combined Financial
Statements are an integral part of these financial statements.
19
<PAGE> 22
RAYONIER INC.
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF INCOME
FOR THE SIX MONTHS ENDED JUNE 30, 1999
(THOUSANDS OF DOLLARS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
HISTORICAL
---------------------------------- PRO FORMA
RAYONIER SMURFIT COMBINED ADJUSTMENTS PRO FORMA
-------- ------- -------- ----------- ---------
<S> <C> <C> <C> <C> <C>
SALES $484,419 $37,204 $521,623 $(14,999) (e) $506,624
-------- ------- -------- -------- --------
COSTS AND EXPENSES
Cost of sales 403,879 20,796 424,675 15,587 (f) 422,137
(14,999) (e)
(3,126) (g)
Selling and general expenses 19,250 3,876 23,126 23,126
Other operating income, net (1,905) (178) (2,083) (2,083)
-------- ------- -------- -------- --------
421,224 24,494 445,718 (2,538) 443,180
-------- ------- -------- -------- --------
OPERATING INCOME 63,195 12,710 75,905 (12,461) 63,444
MISCELLANEOUS INCOME 481 - 481 481
(556) (k)
INTEREST EXPENSE (15,387) - (15,387) (28,295) (h) (44,238)
-------- ------- -------- -------- --------
INCOME BEFORE INCOME TAXES 48,289 12,710 60,999 (41,312) 19,687
INCOME TAX EXPENSE (16,082) (4,957) (21,039) 15,285 (i) (5,754)
-------- ------- -------- -------- --------
NET INCOME $ 32,207 $ 7,753 $ 39,960 $(26,027) $ 13,933
======== ======= ======== ======== ========
BASIC EARNINGS PER SHARE $ 1.16 $ .50
====== =====
DILUTED EARNINGS PER SHARE $ 1.14 $ .49
====== =====
WEIGHTED AVERAGE NUMBER
OF COMMON SHARES:
BASIC 27,796,186 27,796,186
========== ==========
DILUTED 28,305,297 28,305,297
========== ==========
</TABLE>
The accompanying Notes to Unaudited Pro Forma Condensed Combined Financial
Statements are an integral part of these financial statements.
20
<PAGE> 23
RAYONIER INC.
NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS
(Thousands of Dollars)
For the purposes of these Unaudited Pro Forma Condensed Combined
Financial Statements, the purchase price of the Smurfit timberland
assets is $716.5 million, including $6.5 million of estimated
acquisition costs associated with the transaction. The purchase price
was substantially financed by installment notes from Rayonier to Smurfit
for $485 million and a bank loan for $232 million. In addition, certain
pro forma adjustments have been made based on the following assumptions.
(a) Represents the elimination of all assets and liabilities that are not
acquired by Rayonier. The assets acquired are limited to the timber,
timberlands and logging roads.
(b) Represents the financing costs that have been capitalized in the balance
sheet and that will be amortized over the terms of the bank loan and the
installment notes.
(c) The purchase price for the Smurfit timberland assets is $716.5 million
including $6.5 million of estimated acquisition costs associated with
closing costs and adjustments to the purchase price that have been added
to Timber, Timberlands and Logging Roads. The purchase price for
the Smurfit timberlands is comprised of the following:
<TABLE>
<S> <C>
Historical cost of net assets acquired $241,955
Elimination of net liabilities not acquired 29,303
Allocation of excess purchase price over cost of
assets acquired 445,242
--------
Total $716,500
========
</TABLE>
(d) The transaction is financed by installment notes from Rayonier to
Smurfit for $485 million and a bank loan for $232 million.
(e) To eliminate Smurfit's logging and freight costs to reflect timber
stumpage revenues consistent with Rayonier's timberland operating
approach and related revenue recognition.
(f) Reflects the increased timber depletion cost as a result of the purchase
price of $716.5 million. The increased timber depletion for the year
ended December 31, 1998 and the six months ended June 30, 1999 is
$35,169 and $15,587, respectively.
(g) To adjust for timberland lease and real estate tax payments that were
expensed by Smurfit, but which are capitalized by Rayonier in accordance
with its timberland acquisition accounting policy. The amounts for the
year ended December 31, 1998 and the six months ended June 30, 1999 are:
Timberland lease rentals of $3,117 and $1,590; Real estate taxes of
$3,118 and $1,536.
(h) Represents interest expense for the full year of 1998 and six months of
1999 on the additional debt of $717 million used to finance the
acquisition.
(i) Income taxes are adjusted for the full year of 1998 and six months of
1999 at a rate of 37%.
(j) Represents property taxes payable of $1.8 million and deferred rental
and license fee income of $1.4 million that were due upon closing
related to the Smurfit timberland assets.
(k) Amortization of capitalized financing costs in (b) above. Costs are
being amortized over the terms of the bank loan and the installment
notes.
(l) The reduction in current assets is comprised of the following:
<TABLE>
<S> <C>
Excess cash from financing the purchase price $ 500
Liabilities due upon closing in (j) above 3,180
Financing costs capitalized in (b) above (7,500)
------
Total $ (3,820)
=========
</TABLE>
21
<PAGE> 24
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of l934, the
registrant has duly caused this Report to be signed on its behalf by the
undersigned hereunto duly authorized.
RAYONIER INC. (Registrant)
BY George C. Kay
George C. Kay
Vice President and
Corporate Controller
November 12, 1999
22
<PAGE> 25
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION LOCATION
----------- ----------- --------
<S> <C> <C>
2.1 Purchase and Sale Agreement dated July 28, 1999 Filed herewith
between Rayonier Inc. and Jefferson Smurfit
Corporation (U.S.)
2.2 First Amendment to the Purchase and Sale Agreement Filed herewith
dated October 25, 1999 between Rayonier Inc. and
Jefferson Smurfit Corporation (U.S.)
2.3 Assignment and Assumption Agreement dated October Filed herewith
25, 1999 between Jefferson Smurfit Corporation
(U.S.) and Timber Capital Holdings LLC
2.4 Assignment Agreement dated October 25, 1999 Filed herewith
between Rayonier Inc. and Rayonier Timberlands
Operating Company, L.P.
2.5 Timber Cutting Agreement dated October 25, 1999 Filed herewith
between Rayonier Inc. and Jefferson Smurfit
Corporation (U.S.)
23 Consents of experts and counsel Filed herewith
99 Additional exhibits Incorporated by
reference to
Exhibit 99 in
Registrant's
November 9, 1999
Form 8-K
</TABLE>
23
<PAGE> 1
EXHIBIT 2.1
PURCHASE AND SALE AGREEMENT
THIS AGREEMENT (this "Agreement"), made as of the Effective Date (as
defined in paragraph 28 below), by and between RAYONIER INC., a North Carolina
corporation (hereinafter referred to as "Purchaser"), and JEFFERSON SMURFIT
CORPORATION (U.S.), a Delaware corporation (hereinafter referred to as
"Seller");
W I T N E S S E T H:
WHEREAS, Seller is the owner of the Property (as hereinafter defined);
and
WHEREAS, Seller intends to convey the Property to a newly created
limited liability company, wholly owned by Seller (the "LLC"); and
WHEREAS, Purchaser desires to purchase 100% of the membership interests
in the LLC (the "Membership Interests") from Seller;
NOW, THEREFORE, the parties hereby agree as follows:
1. Agreement of Purchase and Sale. Subject to the provisions of this
Agreement, and for the consideration herein stated, Seller agrees to sell to
Purchaser and Purchaser agrees to buy from Seller the Membership Interests. On
or before the date of Closing, Seller shall transfer and convey to LLC, in
accordance with the terms and provisions of this Agreement, all of the following
described property (collectively, the "Property"):
(a) all those certain tracts or parcels of land located in the
States of Alabama, Florida and Georgia and being described on Exhibit A attached
hereto, together with all buildings, structures and other improvements located
thereon, all tenements, hereditaments, easements, appurtenances and privileges
thereto belonging, all timber and trees thereon (excluding the Reserved Timber,
as defined and contemplated in paragraph 3(e) below), and, to the extent (if
any) owned by Seller (but excluding the Reserved Minerals, as defined in
paragraph 3(f) below), all oil, gas and mineral rights and interests with
respect thereto (collectively, the "Owned Real Property");
(b) all of Seller's right, title and interest (excluding the
Reserved Timber) as contemplated in paragraph 3(e) below under those certain
agreements described on Exhibit B attached hereto (collectively, the "Real
Property Leases"), pursuant to which Seller has the right to use or occupy
certain real property owned by third parties and located in the States of
Alabama, Florida and Georgia (the real property covered by the Real Property
Leases being herein referred to collectively as the "Leased Real Property"; the
Owned Real Property and the Leased Real Property being herein referred to
collectively as the "Real Property"); and
1
<PAGE> 2
(c) all of Seller's right, title and interest in and to the
leases, subleases, contracts, licenses and permits described on Exhibit C
attached hereto which are in full force and effect on the date of Closing
(collectively, the "Incidental Leases"), pursuant to which third parties have
the right to use portions of the Real Property for hunting, fishing, apiary and
other incidental purposes.
The parties agree that if any portion of the Real Property is deleted or taken
pursuant to any of paragraphs 4(c), 6(a), 7(c) or 30 below, then the term "Real
Property" shall no longer include such deleted portion; and if any Real Property
Lease is deleted pursuant to any of paragraphs 3(g), 4(c) or 6(b) below, then
the term "Real Property Leases" shall no longer include such deleted Real
Property Lease.
2. Purchase Price. The purchase price (the "Purchase Price") for the
Membership Interests will be Seven Hundred Twenty-Five Million and NO/100
DOLLARS ($725,000,000.00), subject to adjustment to the extent, if any, provided
in paragraphs 3(e), 3(g), 4(c), 6, 7(b) and 30 hereof. The Purchase Price will
be paid at the Closing (as hereinafter defined) (a) by the execution and
delivery by Purchaser to Seller of one or more installment promissory notes
issued in conformity with the requirements of, and subject to the terms and
provisions set forth in, Exhibit D attached hereto (collectively the
"Installment Note") in the original principal amount of Five Hundred Million and
NO/100 Dollars ($500,000,000.00), and (b) by wire transfer of the balance of the
Purchase Price in immediately available funds to an account designated by
Seller.
3. Closing.
(a) The execution and delivery of the documents and
instruments for the consummation of the purchase and sale pursuant hereto (the
"Closing") will take place at 10:00 a.m., local time, on October 15, 1999 at the
offices of Seller's counsel, Sutherland Asbill & Brennan LLP, at 999 Peachtree
Street, NE, Atlanta, Georgia, subject to any extension expressly provided for in
this Agreement, or such earlier date and time, and/or such other location, as
may be mutually agreeable to Seller and Purchaser.
(b) On the date of Closing, Seller shall at its sole cost and
expense, amend the Constituent Documents (as defined herein) to withdraw as the
sole member of the LLC and to admit Purchaser as the sole member of the LLC.
Further, Seller shall on the date of Closing and from time to time thereafter at
Purchaser's request and without further consideration, execute and deliver to
Purchaser such instruments of transfer, conveyance and assignment as Purchaser
shall reasonably request to transfer, convey and assign absolute, full, complete
and marketable title to the Membership Interests to Purchaser.
(c) On or before the date of Closing, Seller will execute
and/or deliver to LLC (i) special or limited warranty deeds (warranting only
against claims arising by, through or under Seller) conveying the Owned Real
Property to LLC subject only to the Permitted Encumbrances (as hereinafter
defined) (the "Deeds"), (ii) assignment and assumption agreements, in form and
substance reasonably satisfactory to Purchaser and Seller, pursuant to which
Seller will assign to
2
<PAGE> 3
LLC all of Seller's right, title and interest under the Real Property Leases and
the Incidental Leases, subject to the Permitted Encumbrances (as hereinafter
defined), and LLC will assume and agree to pay and perform all of Seller's
obligations and duties under the Real Property Leases and the Incidental Leases
(the "Assignments"), (iii) an affidavit as to the non-foreign status of Seller
pursuant to Section 1445 of the Internal Revenue Code, as amended, (iv)
evidence, reasonably satisfactory to Purchaser and LLC's title insurer, with
respect to the power and authority of Seller to enter into and consummate this
Agreement and the transactions contemplated hereby and of the persons executing
documentation on behalf of Seller, and (v) any and all files, documents,
instruments and other items used by Seller in connection with the operation,
management, use and research of the Property, including, without limitation, all
working files, aerial photographs, technical, research, administrative and
operations data. With the consent of Purchaser (not to be unreasonably
withheld), Seller shall be permitted to provide Purchaser copies of certain of
such files, documents, instruments and other items and to retain the originals
thereof for Seller's own use if such originals are necessary or useful to Seller
in connection with open tax years, pending tax controversies, pending
litigation, pending contracts or similar ongoing matters. Notwithstanding any
assignment of this Agreement which may occur prior to Closing, Jefferson Smurfit
Corporation (U.S.) will execute and deliver to Purchaser (i) a Timber Cutting
Agreement in the form attached hereto as Exhibit E (the "Timber Agreement"), and
(ii) a Seedling Supply Agreement in substantially the form attached hereto as
Exhibit F (the "Seedling Agreement").
(d) At the Closing, Purchaser will execute and/or deliver to
Seller (i) the Installment Note and any related note purchase agreement or
similar agreement which may be executed by the parties pursuant to the
provisions of Exhibit D attached hereto, (ii) the Assignments, (iii) the Timber
Agreement, (iv) the Seedling Agreement, and (v) evidence, satisfactory to
Seller, with respect to the power and authority of Purchaser to enter into and
consummate this Agreement and the transactions contemplated hereby and of the
persons executing documentation on behalf of Purchaser. Notwithstanding any
assignment of this Agreement which may occur prior to Closing, Rayonier Inc. and
Purchaser shall execute and deliver to Seller and Jefferson Smurfit Corporation
(U.S.) at Closing a written agreement (which will include customary
representations, warranties and indemnifications concerning the accuracy of the
information provided by Rayonier Inc. and Purchaser) reasonably acceptable to
Purchaser and Seller pursuant to which Rayonier Inc. and Purchaser shall agree
to cooperate in good faith with Seller and Jefferson Smurfit (U.S.) in Seller's
obtaining the "Loan" (as defined in Exhibit D) by (i) making their respective
management teams available to answer questions, to meet with prospective note
purchasers and to otherwise assist in Seller's obtaining the Loan, and (ii) by
preparing and making available such books, records and other information
regarding their respective companies as may be reasonably necessary to such
effort. Purchaser and Rayonier Inc. also covenant and agree to cooperate in good
faith with Seller and Jefferson Smurfit Corporation (U.S.) in such effort in the
manner described above at all times after the Effective Date through the date of
Closing.
(e) In addition, Purchaser will deliver to Seller, and Seller
will deliver to Purchaser, favorable opinions from their respective general
counsel as to the due authorization, execution and enforceability of this
Agreement and all other agreements, contracts and instruments
3
<PAGE> 4
delivered pursuant to this agreement, said opinions to be in substantially
similar form. The parties also agree to do such other acts and execute and
deliver such other documents and instruments as are reasonably necessary for the
consummation of the transactions contemplated hereby.
(f) Prior to the date of Closing, Seller shall have the
unrestricted right to harvest any and all of the pine timber on those portions
of the Real Property identified and described on Exhibit G attached hereto (the
"Reserved Timber"); provided, however, that Seller's rights to the Reserved
Timber shall be limited to harvesting up to 1,351,445 tons of the Reserved
Timber between July 1, 1999 and the end of the Reserved Timber Cutting Period
(as hereinafter defined). In the event Seller fails or elects not to harvest all
or any portion of the Reserved Timber prior to the date of Closing, Seller shall
have the right, pursuant to the provisions of the Timber Agreement, to continue
to enter upon the Real Property and to harvest all or any portion of the
Reserved Timber during the period commencing on the date of Closing and ending
at midnight on December 31, 1999 (the "Reserved Timber Cutting Period");
provided, however, if Seller shall have failed to cut all of the Reserved Timber
prior to the expiration of the Reserved Timber Cutting Period as the result of
fires, adverse weather conditions, temporary loss of access or other conditions
beyond the reasonable control of Seller, Seller shall have the one-time right to
extend the expiration of the Reserved Timber Cutting Period until March 31,
2000, by delivering written notice of such extension to Purchaser on or before
December 15, 1999; provided further, however, that with respect to the timber
covered by the "MONY Timber Agreement" described on Exhibit G hereto, the
Reserved Timber Cutting Period shall expire on April 14, 2000.
(g) Seller, for itself and its successors and assigns, hereby
reserves, and the Deeds, as applicable, shall contain reservations by Seller of,
all of the right, title and interest of Seller in and to any and all oil, gas,
and fugitive hydrocarbons lying 300 feet or more below the surface level of all
portions of the Owned Real Property located in the State of Alabama (the
"Reserved Minerals"), together with full rights and easements for ingress and
egress and use on, over, across and through such Owned Real Property for
purposes of testing or exploring for, drilling for, quarrying, mining,
producing, removing, transporting and owning any or all of the Reserved Minerals
and for performing all such acts as may be necessary or desirable in connection
therewith (collectively, the "Reserved Minerals Access"), and together with all
royalty interests, royalties, bonuses, rental and other rights with respect to
the Reserved Minerals. Notwithstanding the above, to act upon its rights set
forth in this paragraph, (i) Seller must provide reasonable advance written
notice to LLC prior to any exercise of the Reserved Minerals Access; (ii) Seller
must exercise its Reserved Mineral Access in a manner designed to minimize to
the extent reasonably possible any damage to, or interference with LLC's
operation of its business on, the Real Property; (iii) Seller must reimburse LLC
the fair market value of any timber or other improvements located on the Real
Property which are damaged as the result of Seller's exercise of its Reserved
Mineral Access; and (iv) Seller must defend, indemnify and hold harmless LLC and
its successors, successors-in-title and assigns from any and all losses,
liabilities, damages, costs and expenses (including, without limitation,
reasonably restoring the Owned Real Property to its pre-Reserved Minerals Access
condition, and interest, penalties and reasonable attorneys' fees and
disbursements, including fees
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and expenses arising from the enforcement of this provision) based upon, arising
out of or otherwise in respect of Seller's Reserved Minerals Access.
(h) Seller and Purchaser acknowledge that each of the Real
Property Leases listed as Gilder 41, Oliver and Fuqua requires the consent of
the lessor(s) thereunder to the assignment thereof. Seller agrees that it will
use reasonable, good faith efforts to obtain the consent of the lessor(s) under
each of such three Real Property Leases to the assignment thereof from Seller to
LLC. If Seller fails to receive any such consent prior to the Closing, then
Purchaser and Seller may elect to negotiate in good faith in an attempt to
structure an indemnity, a sublease, a timber supply agreement or similar
agreement or arrangement acceptable to Purchaser in its sole discretion which
does not require the consent of the lessor(s) under said leases and which will
transfer to LLC the economic and operational benefits of said leases. In the
event the parties are unwilling or unable to structure such an agreement or
arrangement, then each of Seller and Purchaser by written notice to the other
shall have the right to delete the Real Property Lease with respect to which
such consent was not obtained from the Real Property Leases to be assigned by
Seller to LLC at the Closing. In such event, the Purchase Price shall be reduced
by the following amounts:
Gilder 41 - $9,151,400.00
Oliver - $3,810,800.00
Fuqua - $1,890,500.00
(i) Seller covenants and agrees to use its best efforts to
prepare financial statements in accordance with GAAP and in accordance with
Regulation S-X of the Securities and Exchange Commission for Seller's "Timber
Harvesting and Marketing Business" being acquired by Purchaser for the most
recent three (3) fiscal years ending prior to the date of the Closing, in such
form that such statements can be audited by Ernst & Young LLP, Seller's
independent certified public accountants, and to cause such accountants to issue
to Seller an unqualified opinion with respect to such financial statements (such
statements and related opinions being hereinafter referred to as the "Audited
Financial Statements"). Seller shall, within three (3) business days after the
date of this Agreement, engage Ernst & Young LLP for that purpose, and shall
direct Ernst & Young LLP to use its best efforts to assist in the preparation of
the Audited Financial Statements so that the Audited Financial Statements can be
completed and delivered to Purchaser not later than the date of Closing. Such
engagement shall include the consent of Ernst & Young LLP that the Audited
Financial Statements may be relied upon by Purchaser and Rayonier Inc., and
their respective underwriters (a) to prepare and file reports under the
Securities and Exchange Act of 1934, as needed, and (b) in connection with any
financing or public offering of securities by Purchaser or Rayonier Inc. or any
of their respective affiliates. Purchaser may, at its option and expense, engage
its own certified public accountants, Arthur Andersen LLP, to monitor and review
the progress of the production of the Audited Financial Statements. The delivery
of the Audited Financial Statements shall be an express condition of Purchaser's
obligation to close the purchase and sale transaction contemplated hereunder,
and the Closing shall be extended as necessary, up to and including December 1,
1999, to permit Seller to obtain and deliver the Audited Financial Statements;
provided, however, Purchaser may, at any time during the period of such
extension,
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waive by written notice to Seller the condition that Seller obtain and deliver
the Audited Financial Statements, in which case the parties shall close the
purchase and sale transaction as promptly as practical after the delivery of
such notice, but in no event more than fifteen (15) days after such delivery. In
the event that Seller, after employing its best efforts to procure the Audited
Financial Statements, is unable to obtain and deliver them by December 1, 1999,
then either Seller or Purchaser may terminate this Agreement by delivering
written notice of such termination to the other, whereupon no party will have
any further rights or obligations hereunder, except as may otherwise be
expressly provided herein; provided however, Seller's right to rely on its
failure to provide the Audited Financial Statements as grounds to terminate this
Agreement shall be conditioned upon delivery to Purchaser of a letter signed by
Ernst & Young LLP that, after examination of books and records pertaining to
Seller's "Timber Harvesting and Marketing Business" being acquired by Purchaser
and exhausting all reasonable efforts, it is the opinion of Ernst & Young LLP
that it is not possible to prepare the Audited Financial Statements, and giving
the reasons therefor; and provided further, Seller's right to terminate the
Agreement under this sentence shall be also be conditioned on Seller not being
in material default under any provision of this Agreement.
(j) From and after the Effective Date and continuing after the
Closing, Seller shall provide to Purchaser and Rayonier Inc. such unaudited
financial statements and other financial information pertaining to the "Timber
Harvesting and Marketing Business" being acquired by Purchaser, covering the
period included in the Audited Financial Statements, as well as the period
commencing with the fiscal year in which Closing occurs until the date of
Closing, as may reasonably be required (A) to prepare and file reports under the
Securities Exchange Act of 1934, as amended, and (B) in connection with any
financing or public offering of securities by Purchaser or Rayonier Inc. or any
of their respective affiliates. The provisions of this paragraph shall survive
the Closing.
4. Title.
(a) Seller agrees to convey to LLC fee simple title to the
Owned Real Property and to assign to LLC the Real Property Leases covering the
Leased Real Property, free and clear of all liens, claims and encumbrances
created by Seller, except for the matters set forth on Exhibit H attached hereto
(the "Permitted Encumbrances").
(b) Purchaser acknowledges that Seller has made available to
Purchaser, for Purchaser's review, certain title insurance commitments relating
to the Real Property, as listed on Exhibit I attached hereto (the "Title
Commitments"). Within ten (10) days after the Effective Date, Purchaser shall
give written notice to Seller of any Title Objections (as hereinafter defined)
disclosed by the Title Commitments which are unacceptable to Purchaser. If
Purchaser fails to give any such notice with respect to any Title Objections
which are disclosed in the Title Commitments on or prior to the aforesaid date,
then Purchaser shall be deemed to have waived such Title Objections. Thereafter,
Purchaser may have Seller's title to the Real Property re-examined at any time
and from time to time up to and through the date of Closing, and may give Seller
written notice
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of any additional Title Objections which were not of record as of the effective
date of Purchaser's prior title examination. For purposes of this Agreement, the
term "Title Objections" shall mean any mortgages, deeds of trust, liens,
financing statements, security interests, easements, leases, rental agreements,
licenses, restrictive covenants, agreements, options, claims, clouds,
encroachments, rights, taxes, assessments, mechanics' or materialmen's liens
(inchoate or perfected), liens for federal or state estate or inheritance taxes,
and other encumbrances of any nature whatsoever, whether existing of record or
otherwise, together with any and all matters of any kind or description,
including, without limitation, matters of survey and any litigation or other
proceedings affecting Seller and which affect title to the Real Property or the
right, power and authority of Seller to convey fee simple, marketable and
insurable title to the Real Property to Purchaser in accordance with the terms
of this Agreement, other than the Permitted Encumbrances.
(c) Upon receipt of a Title Objection notice hereunder, Seller
shall have ten (10) business days within which to notify Purchaser in writing
whether, in its sole discretion, it will: (i) remediate the Title Objection;
(ii) indemnify Purchaser for the Title Objection, subject to reasonable time and
dollar limits given the nature and extent of such Title Objection and such
written indemnity, in form and content reasonably acceptable to Purchaser, shall
be delivered to Purchaser by Seller at Closing (the "Indemnity Letter"), (iii)
reduce the Purchase Price in an amount equal to the diminution in value of the
affected portion of the Real Property encumbered by the Title Objection, or (iv)
delete from the Real Property the portion of the Real Property affected by the
Title Objection, whereupon the Purchase Price shall be reduced by the value of
such deleted portion of the Real Property. With respect to the alternatives set
forth in clauses (iii) and (iv) above, Seller shall deliver to Purchaser a good
faith estimate of the diminution in value of that portion of the Real Property
affected by the Title Objection, or the value of the portion of the Real
Property to be deleted, as applicable, which amount shall be subject to the
approval of Purchaser, such approval not to be unreasonably withheld,
conditioned or delayed. In the event Seller and Purchaser are unable to agree
upon the amount by which the Purchase Price should be reduced in connection with
the Title Objection, the question of such value shall be submitted for
determination in accordance with the provisions of paragraph 25. Should Seller
conclude in good faith that Purchaser's Title Objection is not authorized
pursuant to the terms of this Agreement, then Seller shall, within ten (10)
business days of receipt of Purchaser's notice, notify Purchaser of its
disagreement. Similarly, should Purchaser conclude in good faith that Seller's
attempted remediation of Purchaser's Title Objection was not successful,
Purchaser shall notify Seller of its disagreement. In either event, Purchaser
shall have the right to: (i) accept the title as is and waive Purchaser's Title
Objection; or (ii) proceed to Closing but seek a determination as to the merits
of Purchaser's Title Objection with any dispute to be determined in accordance
with the provisions of paragraph 25. Any reasonably disputed amounts shall be
escrowed by Purchaser in a separate interest-bearing account or other investment
satisfactory to Purchaser and Seller with the parties proceeding to Closing.
(d) In the event Seller chooses to remediate the Title
Objections, the transactions contemplated hereby shall close, subject to the
other terms and conditions of this Agreement, and, in such event, Seller shall
undertake the remediation at its sole cost and expense (including, without
limitation, any incremental title insurance cost or premium associated
therewith). A Title Objection
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shall be deemed remediated when and if Purchaser's title insurance company
agrees in writing to insure against the defect either by removing the defect
from its Title Commitment or by affirmatively agreeing in writing to insure
against the defect. Purchaser shall waive all objection and accept any such
remediated defects that Purchaser identified as Title Objections. Seller shall
bear all costs of remediating any Title Objection pursuant to this paragraph 4.
(e) Purchaser shall have the absolute right to terminate this
Agreement if the total acreage of the Real Property affected by Title Objections
pursuant to this paragraph 4 and not subsequently waived by Purchaser within ten
(10) days prior to the date of Closing, exceeds 150,000 acres.
(f) At or prior to the Closing, Seller will cause any monetary
liens, mortgages, deeds to secure debt and deeds of trust encumbering the Owned
Real Property or Seller's leasehold interest in the Leased Real Property to be
satisfied or otherwise removed.
(g) Except for the Reserved Timber and except for the
Permitted Encumbrances, so long as this Agreement remains in force, Seller will
not lease, encumber or convey all or part of the Property or any interest
therein, without the prior written consent of Purchaser.
(h) Seller agrees that it will take such action and deliver
such indemnities, affidavits and agreements as may be reasonably necessary or
appropriate to cause the LLC's title insurer to (i) issue a "non-imputation
endorsement" in favor of LLC in form and substance reasonably acceptable to
Purchaser to ensure that no knowledge of Seller or its officers, managers,
members or shareholders shall be imputed to the LLC for purposes of determining
coverage under the LLC's title insurance policies; and (ii) to delete its
standard creditors rights exception to coverage.
5. Inspection; Sale "AS IS". (a) Purchaser and its agents and
representatives will have the right prior to the Closing to enter upon and to
inspect the Real Property, including the right to examine, survey and perform
timber cruises, environmental assessments and other tests or surveys which it
may deem necessary or advisable. Purchaser shall give reasonable advance notice
to Seller's Vice President and General Manager, John Davis (Phone: 904-277-5816)
prior to any such entry on the Real Property, which notice shall include (i) a
reasonably detailed description of the scope of the examination, survey, timber
cruises, environmental assessments or other test or surveys which Purchaser
intends to conduct on or about the Real Property, (ii) the identity of the
consultant or agent which will be entering the Real Property on Purchaser's
behalf, and (iii) the date of such consultant's or agent's initial entry upon
the Real Property. Thereafter, Purchaser shall keep Seller's General Manager
progressively advised as to the status of the activities being performed on the
Real Property. Seller shall have the right to have a representative of Seller
accompany Purchaser or its agents or representatives during any such entry on
the Real Property. Subject to the requirements of applicable laws, rules and
regulations, Purchaser will not discuss with or disclose to any governmental
authority the results of any report, test, examination or assessment conducted
by or on behalf of Purchaser with respect to the Real Property unless and until
the written consent of Seller to such discussion or disclosure has been received
by Purchaser. Purchaser will deliver to
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Seller, promptly upon Purchaser's receipt thereof, complete copies of all final
results, reports and other information in connection with any inspection,
examination, test, survey, cruise or assessment performed by or for Purchaser.
Purchaser's entry upon the Real Property pursuant to this paragraph shall be at
Purchaser's own risk, and Seller, its affiliates, officers and employees shall
not be responsible to Purchaser or to any person claiming through or under
Purchaser for injury, loss or damage, whether to person, including death arising
therefrom, or property suffered by Purchaser or any such person on the Real
Property from any cause whatever. Purchaser hereby agrees to indemnify and hold
Seller harmless from and against any and all damages, liens, losses,
liabilities, claims, costs and expenses (including, without limitation,
attorneys' fees and court costs) caused by said inspections, examinations,
tests, surveys, cruises and assessments. The foregoing indemnification provision
will survive the Closing and will survive any termination of this Agreement.
(b) Seller agrees to make available to Purchaser, at Seller's
offices in Fernandina, Florida or Stone Mountain, Georgia, for reviewing and
copying by Purchaser at Purchaser's expense, copies of various materials
relating to the Property, including maps, aerial photographs, surveys, timber
inventory data, harvest schedules, the Real Property Leases, the Incidental
Leases, the Title Commitments and other title materials.
(c) Except for the special or limited warranty to be included
in the Deeds and except for the warranties, representations and indemnities and
related agreements expressly made by Seller in this Agreement, Purchaser
acknowledges and agrees as follows: (i) Purchaser is purchasing and Seller is
selling the Property (by way of the purchase and sale of the Membership
Interests) "AS IS", "WHERE IS" and "WITH ALL FAULTS"; (ii) Seller has not made,
does not make and specifically disclaims any representations, warranties,
guaranties, commitments, promises or agreements of any kind, express or implied,
with respect to the Property, including, without limitation, governmental
regulations, requirements or constraints, site or physical conditions, condition
of the Property, matters affecting use or occupancy, profitability, volumes, age
classes, species, merchantability, yields, acreage, access, availability,
quantity or quality of water, environmental compliance, prospects for future
improvements or future development, economic feasibility, marketability or any
other matter relating to the Property except as otherwise set forth herein;
(iii) Purchaser is relying on Purchaser's independent investigations and
examinations relating to the Property; and (iv) Purchaser (for itself and, from
and after the date of Closing, for the LLC as owner of the Property) waives, and
releases Seller from, any and all claims, liabilities, losses, damages, costs
and expenses, whether known or unknown, or foreseen or unforeseen, with respect
to the condition of the Property, other than the "Permitted Environmental
Claims," as hereinafter defined. For purposes of this Agreement, the term
"Permitted Environmental Claims" shall mean, subject to the limitations provided
in the following sentence, any and all claims, liabilities, losses, damages,
costs and expenses, whether known or unknown, or foreseen or unforeseen with
respect to the condition of the Property arising under or with respect to any
Environmental Laws (as hereinafter defined). Notwithstanding the foregoing,
Purchaser's right to assert or seek recovery of any Permitted Environmental
Claims shall be limited as follows: (i) after the fifth (5th) anniversary of the
Closing hereunder, Purchaser may not assert or seek recovery of
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any Permitted Environmental Claims, unless said claims arise under or with
respect to (A) the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, 42 USC Section 9601, et seq., as amended ("CERCLA"), (B)
any act similar or analogous to CERCLA which is adopted by the States of
Georgia, Alabama and/or Florida, and/or (C) any other Environmental Laws (as
hereinafter defined), but, with respect to the provisions of this clause (C)
only, only to the extent related to or arising out of the acts or omissions of
Jefferson Smurfit Corporation (U.S.) and its agents, affiliates, contractors
and/or employees during its period of ownership of the Real Property, (ii)
Seller shall have no liability to Purchaser with respect to any Permitted
Environmental Claims until the aggregate amount of all such claims, plus the
aggregate amount of all of Purchaser's Losses under paragraph 6(b), plus the
aggregate amount of all losses by Purchaser for all breaches by Seller of
warranties and representations provided for in paragraph 8(c) exceeds the sum of
$5,000,000.00, and then only for the amount by which such claims exceed such
sum; and (iii) in no event will Seller's aggregate liability for Permitted
Environmental Claims under this paragraph plus all of Purchaser's Losses under
paragraph 6(b) plus the aggregate amount of all losses by Purchaser for all
breaches by Seller of warranties and representations provided for under
paragraph 8(c), exceed $200,000,000.00. The provisions of this paragraph 5(c)
will survive the Closing and will survive any termination of this Agreement.
6. Environmental Assessment.
(a) Within forty-five (45) days from the Effective Date,
Purchaser may conduct an environmental assessment of the Real Property utilizing
an environmental consultant of Purchaser's choice; provided, however, Purchaser
shall have the right to extend the aforesaid forty-five (45) day period for a
period not to exceed fifteen (15) days upon delivery to Seller of written notice
of the exercise of such extension right not later than the expiration of said
forty-five (45) day period. If the environmental assessment obtained or
conducted by Purchaser reveals any Environmental Contamination on or under any
portion of the Real Property and if, in the good faith professional judgment of
Purchaser's environmental consultant the Environmental Contamination could
reasonably be expected to cost in excess of $50,000.00 per Environmental
Contamination in any one area or, in the aggregate, in excess of $250,000.00
within any "Block" (as designated on Seller's internally prepared Block Maps,
copies of which have been made available to Purchaser for its review and use) to
investigate and remediate, Purchaser shall notify Seller in writing within such
forty-five (45) day period (as the same may be extended, as provided above)
identifying with reasonable specificity the Environmental Contamination and
exercising the right, at Purchaser's election, to do the following: (i) if such
portion is Owned Real Property, then Purchaser may delete such portion or
"Block," as applicable, from the Real Property; or (ii) if such portion is
Leased Real Property, then Purchaser may delete the Real Property Lease covering
such portion or "Block," as applicable (and all of the Leased Real Property
covered by such Real Property Lease shall be deemed deleted from the Real
Property). If Purchaser makes a timely election under either of clauses (i) or
(ii) of the preceding sentence, then the Purchase Price will be reduced by an
amount equal to the value (assuming no Environmental Contamination) of such
deleted portion of Owned Real Property or the value (assuming no Environmental
Contamination) of Seller's leasehold interest under such deleted Real Property
Lease, as the case may be, as mutually agreed upon by
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Purchaser and Seller, or if Purchaser and Seller are unable to agree within
fifteen (15) days after Seller's receipt of Purchaser's election notice, then
such value and the amount of such reduction will be determined pursuant to
paragraph 25 below; provided, however, if the sum of the values of all such
deletions under this paragraph 6, plus the values of all portions of the Real
Property deleted pursuant to paragraph 4(c) above, plus the value of all
portions of the timber which are damaged or destroyed by fire, insect
infestation or other casualty (paragraph 7(b) below) and the values of all
portions of the Real Property which are taken or to be taken by condemnation or
eminent domain (paragraph 7(c) below), exceeds fifteen percent (15%) of the
Purchase Price, then Purchaser may terminate this Agreement by promptly giving
written notice of such termination to Seller, whereupon no party hereto will
have any further rights or obligations hereunder, except as may otherwise be
expressly provided herein, and any determinations of such values will be
mutually agreed upon by Purchaser and Seller, or if Purchaser and Seller are
unable to agree, then such values will be determined pursuant to paragraph 25
below. The date of Closing will be extended to the extent necessary to permit
any determination(s) of value pursuant to this paragraph.
(b) Subject to the limitations set forth below in Paragraph
6(c), Seller agrees to indemnify, defend and hold harmless Purchaser and LLC
(and their respective directors, partners, members, officers, employees,
shareholders, successors and assigns) from and against all losses, liabilities,
damages, costs and expenses (including, without limitation, interest, penalties
and reasonable attorneys' fees and disbursements, including fees and expenses
arising from the enforcement of rights under this Agreement) ("Losses") actually
incurred by Purchaser, LLC or any of such other indemnified parties based upon,
arising out of or otherwise in respect of: (i) any Environmental Contamination
(as hereinafter defined) on, in, about or under the Real Property on or prior to
Closing which is not disclosed in writing by Seller or in the environmental
assessments obtained by Seller prior to Closing, and (ii) any Environmental
Contamination on, in, about or under the Real Property that originates from any
of the sites identified on Seller's "Carve-out Sites" document dated April 26,
1999, and any sites deleted by Purchaser pursuant to paragraph 6(a).
For purposes of this Agreement, the term "Hazardous Material"
means any chemical, compound, constituent, material, waste, contaminant or other
substance (including petroleum and petroleum derived substances or wastes) as
defined in or regulated by any Environmental Laws (as hereinafter defined).
"Environmental Contamination" means any release, spill, emission, leak,
injection, deposit, disposal, discharge, dumping, dispersal, leaching, migration
or the presence (collectively, "Release") of Hazardous Materials, including the
movement of Hazardous Materials through groundwater. Environmental Laws mean any
federal, state and local laws (including common law), regulations or other legal
requirements relating to the protection of the environment, natural resources,
pollution control, hazardous materials or human health.
At Purchaser's discretion, any exception to the
representations or warranties set forth in paragraphs 8(a)(vi)(K)-(O) shall be
handled either under paragraph 6(a) or 6(b).
(c) The indemnification obligations set forth in paragraph
6(b) above shall be subject to the following limitations: (i) the
indemnification obligations shall survive the Closing but
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shall expire and be of no further force or effect whatsoever as of the fifth
(5th) anniversary of the date of Closing, except to the extent, if any, that
Purchaser has given to Seller, prior to expiration of the five-year period,
written notice of specific indemnifiable Losses and (ii) the limitations set
forth in paragraph 8(d)(ii) and (iii).
7. Condition of Property; Damage; Condemnation.
(a) Seller agrees that at the Closing the Property will be in
the same condition as exists on the Effective Date hereof, subject to natural
wear and tear, to condemnation, casualties and other circumstances beyond
Seller's control, to Seller's use, operation and management of the Property in
the ordinary course of business, and to harvesting, cutting and removal of the
Reserved Timber.
(b) If at any time prior to the Closing, any material portion
of the timber which is included as part of the Real Property is destroyed or
damaged by fire, insect infestation or other casualty, then the Purchase Price
will be reduced by an amount equal to the value of the portions of such timber
so damaged or destroyed as mutually agreed by Seller and Purchaser, or if Seller
and Purchaser are unable to agree within fifteen (15) days after Purchaser's
receipt of notice of the occurrence of such damage or destruction, such value
and the amount of such reduction will be determined pursuant to paragraph 25
hereof; provided, however, if the sum of the values of all portions of such
timber so damaged or destroyed, plus the values of all deletions pursuant to
paragraphs 4(c) and 6 above and the values of all portions of the Real Property
which are taken or to be taken by condemnation or eminent domain (paragraph 7(c)
below), exceeds fifteen percent (15%) of the Purchase Price, then Purchaser may
terminate this Agreement by promptly giving written notice of such termination
to Seller, whereupon no party hereto will have any further rights or obligations
hereunder, except as may otherwise be expressly provided herein, and any
determinations of such values will be mutually agreed upon by Purchaser and
Seller, or if Purchaser and Seller are unable to agree, then such values will be
determined pursuant to paragraph 25 below. The date of Closing will be extended
to the extent necessary to permit any determination(s) of value pursuant to the
preceding sentence.
(c) If at any time prior to the Closing, any action or
proceeding is filed or threatened under which any material portion of the Real
Property is or may be taken pursuant to any law, ordinance or regulation by
condemnation or the right of eminent domain, then Purchaser and Seller will
proceed with the purchase and sale of the Property (excluding any portion
thereof so taken prior to Closing) pursuant to this Agreement, notwithstanding
such action or proceeding, and the Purchase Price will not be reduced, but
Purchaser will be entitled to receive all proceeds of any awards paid or payable
to Seller with respect to such taking; provided, however, if the sum of the
values of all portions of the Real Property so taken or to be taken, plus the
values of all deletions pursuant to paragraphs 4(c) and 6 above and the values
of all portions of the timber which are damaged or destroyed by fire, insect
infestation or other casualty (paragraph 7(b) above), exceeds fifteen percent
(15%) of the Purchase Price, then Purchaser may terminate this Agreement by
promptly giving written notice of such termination to Seller, whereupon no party
hereto will have
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any further rights or obligations hereunder, except as may otherwise be
expressly provided herein, and any determinations of such values will be
mutually agreed upon by Purchaser and Seller, or if Purchaser and Seller are
unable to agree, then such values will be determined pursuant to paragraph 25
below. The date of Closing will be extended to the extent necessary to permit
any determination(s) of value pursuant to the preceding sentence.
8. Warranties and Representations.
(a) Seller hereby warrants and represents to Purchaser as
follows:
(i) Seller is a corporation duly formed and validly
existing under the laws of the State of Delaware and is duly qualified
to do business in the States of Alabama, Florida and Georgia, and
Seller has the full capacity, power and authority to enter into this
Agreement and fully perform its obligations hereunder.
(ii) This Agreement and the performance hereof by
Seller will not contravene any law or contractual restriction binding
on Seller.
(iii) No consent, approval, order or authorization of
any court or other governmental entity is required to be obtained by
Seller in connection with the execution and delivery of this Agreement
or the performance hereof by Seller, except for any filing required
under the HSR Act (as hereinafter defined).
(iv) This Agreement has been duly executed and
delivered by Seller and constitutes the valid and binding obligation of
Seller, enforceable against Seller in accordance with its terms,
subject to applicable bankruptcy, insolvency and other similar laws
affecting the enforceability of creditors' rights generally and the
discretion of the courts with respect to equitable remedies.
(v) Seller warrants, represents and covenants the
following with respect to the LLC:
(A) The LLC shall, as of the date of
Closing, be a limited liability company duly organized,
validly existing and in good standing under the laws of the
State of Delaware, and shall be duly qualified to do business
in the States of Alabama, Florida and Georgia, and shall have
the full capacity, power and authority to fully perform its
obligations under this Agreement.
(B) Seller shall, as of the date of Closing,
be the record owner and shall hold legal title to all of the
Membership Interests. Such Membership Interests shall be
validly issued, fully paid and nonassessable, and shall be
free and clear of any liens, claims, charges, rights of first
refusal or other encumbrances of any nature whatsoever. Other
than such Membership Interests, Seller shall own no securities
of
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the LLC or any right of any kind to have any such security
issued. Upon the amendment of the Constituent Documents
pursuant to paragraph 3(b) hereof, Seller shall have
transferred to Purchaser good and valid title to all
Membership Interests owned by Seller, free and clear of any
liens, claims, charges, rights of first refusal or other
encumbrances of any nature whatsoever. Seller shall have the
exclusive right, power and authority to vote such Membership
Interests owned by Seller. Seller covenants that at Closing it
shall not be a party to or bound by any agreement affecting or
relating to Seller's right to transfer or vote the Membership
Interests owned by Seller. Seller covenants that it shall not,
nor shall it cause the LLC to, issue, sell or grant options,
warrants or rights to purchase or subscribe to, or enter into
an arrangement or contract with respect to the issuance or
sale of any of the securities of the LLC or rights or
obligations convertible into or exchangeable for any
Membership Interests or other securities of the LLC or make
any changes (by split-up, combination, reorganization or
otherwise) in the capital structure of the LLC.
(C) Seller covenants and agrees with
Purchaser that the terms of the articles of organization,
operating agreement (if applicable) and other similar
formation documents of the LLC (the "Constituent Documents")
shall be prepared and filed (at the sole expense of Seller) in
the form reasonably agreed upon by the parties hereto.
(D) This Agreement and all documents
executed by Seller in connection with this Agreement which are
to be delivered to Purchaser at Closing are, or at the time of
Closing will be, duly authorized, executed and delivered by
Seller, and are or at the Closing will be, the legal, valid
and binding obligations of Seller, enforceable against Seller
in accordance with their terms, subject to applicable
bankruptcy, insolvency, reorganization and other laws of
general application affecting the enforcement of rights or
remedies of creditors generally and the discretion of the
courts with respect to equitable remedies. This Agreement and
such documents do not and at the time of Closing will not
violate any provisions of any agreement or judicial order to
which Seller or the LLC is a party or by which it is bound.
(E) As of the date of Closing, Seller shall
be the sole beneficial and legal owner of the Membership
Interests, free and clear of any and all liens, claims,
encumbrances and security interests, and will convey to
Purchaser good title to the same free and clear of any and all
liens, claims, encumbrances and security interests.
(F) Seller does not, and at the time of
Closing will not, have any claim against the LLC.
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(G) As of the date of Closing, there shall
be no written or filed claims, demands, actions, suits or
proceedings whatsoever pending or threatened against Seller
with respect to the LLC or the Membership Interests.
(H) On the date of Closing, the LLC will
have no liabilities of any nature whatsoever (whether express
or implied, fixed or contingent, liquidated or unliquidated,
known or unknown, accrued, due or to become due) other than
arising under the Leases and the Permitted Exceptions, and
Purchaser shall not be liable to pay, perform or discharge any
such obligation or liability which may have arisen prior to
the date of Closing.
(I) As of the date of Closing, the LLC will
not have any employees.
(J) Neither the Property nor the Membership
Interests constitute, in whole or in part the asset of any
employee benefit plan within the meaning of Section 3(3) of
the Employee Retirement Income Security Act of 1974, as
amended.
(K) As of the date of Closing, the LLC shall
not have filed or be required to file any federal, state,
county or local income, excise, sales, property, withholding,
social security, franchise, license or information returns or
other tax returns or reports.
(L) At Closing, the LLC will own fee simple
title to the Owned Real Property and, subject to the
provisions of paragraph 3(h), will have a valid leasehold
interest in the Leased Real Property, free and clear of any
and all liens, claims and encumbrances related thereto, other
than Permitted Encumbrances.
(M) At Closing, the Constituent Documents
shall not have been further modified or amended since the date
of filing and shall be in full force and effect as of the date
of filing.
(N) As of the date of Closing, there shall
be no written or filed claims, demands, actions, suits or
proceedings whatsoever pending or threatened against the LLC,
and Seller shall not have received any notice, written or
oral, of any claims, demands, actions, suits or proceedings
whatsoever, pending or threatened, against the LLC.
(O) Prior to Closing, the sole business of
the LLC shall be the ownership and leasing of the Property and
activities directly related thereto.
(P) For the period the LLC is in existence
prior to Closing up to and including the date of Closing, the
LLC shall have been and will be disregarded as an entity under
Treasury Regulations Section 301.7701.-3 (the "Regulations")
and
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Seller shall not have taken, and will not take, any action
inconsistent with the treatment of the LLC as disregarded as
an entity under the Regulations, including without limitation
the filing of an election under the Regulations to treat the
LLC as a corporation and not disregarded as an entity under
the Regulations.
(vi) Except for the matters set forth on the
Disclosure Schedule attached hereto as Exhibit J, Seller warrants and
represents, in each case to Seller's knowledge, as follows:
(A) Seller owns fee simple title to the
Owned Real Property, subject to the Permitted Encumbrances.
(B) Seller has made available for
Purchaser's review at Seller's offices correct and complete
copies of the Real Property Leases; the Real Property Leases
are valid and subsisting agreements and are in full force and
effect in accordance with their respective terms; and there
are no existing defaults by Seller under any of the Real
Property Leases.
(C) Seller has made available for
Purchaser's review at Seller's offices representative copies
of the Incidental Leases; to the extent that actual copies of
the Incidental Leases have not been provided to Purchaser for
its review, Seller hereby represents that all such Incidental
Leases are in substantially the form of the representative
copies previously made available to Purchaser; if and to the
extent that Seller has inadvertently failed to list any
Incidental Lease on Exhibit C hereto, Seller represents and
warrants that any such additional Incidental Leases shall be
in substantially the form of the representative copies
previously made available to Purchaser; other than the
Incidental Leases and the Permitted Encumbrances, there are no
leases, subleases, contracts, licenses or permits (other than
the oil, gas and mineral leases (the "OGM Leases") described
on Exhibit K attached hereto which shall be retained by
Seller) pursuant to which any person other than Seller has the
right to use or occupy any of the Real Property; and there are
no existing defaults by Seller under any of the Incidental
Leases.
(D) The Real Property is in compliance in
all material respects with all applicable statutes,
ordinances, rules, regulations and orders of all federal,
state and local governmental authorities having jurisdiction
over the Real Property; and Seller has not received any notice
from any such governmental authority of any material violation
of any such statute, ordinance, rule, regulation or order
relating to the Real Property.
(E) No person other than Seller has any
right to conduct timbering operations on the Real Property or
any right, title or interest in or to any standing timber
located on the Real Property.
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(F) There is neither pending nor threatened
any legal action against Seller or involving the Real Property
which could materially affect Purchaser or LLC after its
acquisition of the Real Property or which could materially
enjoin or restrict Seller's rights or ability to perform its
obligations under this Agreement.
(G) There are no management, service, or
brokerage agreements affecting the Real Property to which
Seller is a party, or of which Seller has actual knowledge,
that will create a liability for Purchaser or LLC, or a lien
or charge upon the Real Property.
(H) The Real Property Leases, the Incidental
Leases and the OGM Leases (which shall be retained by Seller)
(a) are all of the material contracts concerning the Real
Property to which Seller is a party and (b) do not provide for
management services by any person or entity to be rendered for
the benefit of the Real Property.
(I) Other than the Permitted Encumbrances,
there are no claims made by third parties pursuant to which
Seller's title or estate or access to any portion of the Real
Property is or has been challenged, and Seller is in
undisputed possession of the Real Property.
(J) Other than the Reserved Timber, Seller
has not harvested any timber on the Real Property that is
represented as unharvested in the Seller's Land Data dated
July 1, 1999.
(K) Seller has not received notice of actual
or threatened liability under any Environmental Laws, and
there are no facts or circumstances relating to the Real
Property that would reasonably be expected to form the basis
for the assertion of any claim against the Seller under any
Environmental Laws or that would have a material adverse
effect on the Real Property.
(L) As relates to the Real Property, Seller
has not entered into, agreed to or contemplates entering into
any consent decree or order under any Environmental Law, and
Seller is not subject to any judgment, decree or judicial or
administrative order relating to compliance with, or the
cleanup of Hazardous Materials under, any Environmental Laws
and the Real Property complies in all material respects with
all applicable Environmental Laws.
(M) The Real Property does not contain and,
during Seller's ownership or operation, has not contained, any
underground storage tanks, landfills, surface impoundments or
cattle dip vats and there has been no Release of any Hazardous
Materials on or under the Real Property in violation of any
Environmental Laws during Seller's ownership or operation.
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(N) Seller has made available to Purchaser
all existing environmentally related reports, test data,
audits, assessments, correspondence, studies and investigation
results relating to the Real Property.
(O) There are no species currently listed by
the U.S. Fish and Wildlife Service as endangered or threatened
species living on the Real Property which could have a
material and adverse effect on Purchaser's ability to grow and
harvest timber on the Real Property.
As used in this paragraph 8(a)(v), the term "Seller's knowledge" means only the
present, actual knowledge of any one of John E. Davis (Seller's Vice President
and General Manager), Merle Conkin (Seller's Land Manager), Kim Lloyd (Seller's
Land Operations Manager), Joe Parsons (Seller's Technical Director) or Jim
Kauffman (Seller's Land Forester), without any duty or obligation to undertake
or make any due diligence, inquiry or investigation. At Closing, Seller shall
deliver to Purchaser a certificate executed by Seller in favor of Purchaser
reaffirming or updating, as the case may be, the representations and warranties
set forth in paragraph 8(a) above; provided, however, that the delivery of any
supplemental disclosure pursuant to this sentence shall not cure any material
breach of any representation or warranty requiring disclosure of such matter
prior to or on the date of this Agreement or otherwise limit or affect the
determination of the satisfaction of the condition to deliver such certificate.
(b) Purchaser hereby warrants, represents and covenants to
Seller as follows:
(i) Purchaser is a corporation duly formed and
validly existing under the laws of the State of North Carolina and has
full capacity, power and authority to enter into this Agreement and
fully perform its obligations hereunder.
(ii) This Agreement and the performance hereof by
Purchaser will not contravene any law or contractual restriction
binding on Purchaser.
(iii) No consent, approval, order or authorization of
any court or other governmental entity is required to be obtained by
Purchaser in connection with execution and delivery of this Agreement
or the performance hereof by Purchaser, except for any filing required
under the HSR Act (as hereinafter defined).
(iv) This Agreement and all documents executed by
Purchaser in connection with this Agreement which are to be delivered
by Purchaser at Closing are, or at the time of Closing will be, duly
authorized, executed and delivered by Purchaser, and are or at the
Closing will be, the legal, valid and binding obligations of Purchaser,
enforceable against Purchaser in accordance with their terms, subject
to applicable bankruptcy, insolvency and other laws of general
application affecting the enforceability of creditors' rights generally
and the discretion of the courts with respect to equitable remedies.
This
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Agreement and such documents do not, and at the time of Closing will
not, violate any provisions of any agreement or judicial order to which
Purchaser is a party or by which it is bound.
(v) Purchaser intends to own, operate and manage the
Real Property for use in its ongoing business operations.
At Closing, Purchaser shall deliver to Seller a
certificate executed by Purchaser in favor of Seller reaffirming or
updating, as the case may be, the representations and warranties set
forth in this paragraph 8(b); provided, however, that the delivery of
any supplemental disclosure pursuant to this sentence shall not cure
any breach of any representation or warranty requiring disclosure of
such matter prior to or on the date of this Agreement or otherwise
limit or affect the determination of the satisfaction of the condition
to deliver such certificate.
(c) Subject to the limitations set forth in paragraph 8(d)
below, Seller and Purchaser each agrees to indemnify and hold harmless the other
from any damage, loss, liability, expense, cost and claim (including, without
limitation, attorneys' fees and court costs) incurred by or asserted against the
indemnified party as a result of the breach by the indemnifying party of any
warranty or representation set forth in this paragraph 8.
(d) The indemnification obligations set forth in paragraph
8(c) above shall be subject to the following limitations: (i) such
indemnification obligations will survive the Closing, but will expire and be of
no further force and effect whatsoever (A) as to the representations and
warranties set forth in paragraphs 8(a)(i) through (v), 8(a)(vi)(A) through (J),
and 8(b)(i) through (v), on the date which is eighteen (18) months from the date
of Closing, and (B) as to the representations and warranties set forth in
paragraphs 8(a)(vi)(K)-(O) on the date which is five (5) years from the date of
Closing, except to the extent, if any, that Seller or Purchaser, as the case may
be, has given to the other party, prior to expiration of such eighteen-month
period, or five-year period, as the case may be, written notice of a specific
claim of a breach by such other party of a warranty or representation set forth
in this paragraph 8; (ii) neither Seller nor Purchaser will have any liability
for indemnification under paragraph 8(c) and Seller will have no liability for
Permitted Environmental Claims under paragraph 5(c) or for indemnification under
paragraph 6(b) until the aggregate amount of all losses by the indemnified party
for all breaches by the indemnifying party of warranties and representations set
forth in paragraph 8(c) plus, as to Seller, all Permitted Environmental Claims
under paragraph 5(c) and all Purchaser's Losses under paragraph 6(b), exceeds
the sum of $5,000,000.00 and then only for the amount by which such losses
exceeds such sum; and (iii) in no event will Seller or Purchaser have any
liability for indemnification under paragraph 8(c) plus, as to Seller, any
liability for Permitted Environmental Claims under paragraph 5(c) and for
indemnification under paragraph 6(b), in excess of an aggregate amount of
$200,000,000.00. Notwithstanding anything contained in this Agreement to the
contrary, Seller's liability with respect to a breach of Seller's
representations and warranties under paragraphs 8(a)(v)(B), 8(a)(v)(E) and
8(a)(v)(P) above shall not be subject to the limitations set forth in clauses
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(ii) and (iii) of this paragraph 8(d). Further notwithstanding anything
contained herein to the contrary, the representation and warranty made by Seller
in paragraph 8(a)(v)(P) above shall survive the Closing until the earliest to
occur of (a) the closing of the statute of limitations for Purchaser's taxable
year which includes the day following the date of Closing, (b) a final
determination of an applicable court to the effect that the LLC is not a
corporation at the date of Closing, and (c) the execution by Purchaser and the
Internal Revenue Service ("IRS") of an agreement binding on the IRS to the
effect that the LLC is not a corporation on the date of Closing.
9 Operation of Property Prior to Closing; Site Preparation
Reimbursement.
(a) During the period from the Effective Date until the date
of the Closing, Seller will continue to use, operate and manage the Property in
the ordinary course of business and consistent with past practice, provided that
unless Purchaser shall have consented thereto in writing, Seller will not
harvest, cut or remove any timber from the Real Property other than the Reserved
Timber and other than timber harvested, cut and/or removed pursuant to salvage
operations in connection with fire, insect infestation or other casualties
affecting the Real Property.
(b) Purchaser acknowledges that between the Effective Date and
the date of Closing Seller, in the ordinary course of business, shall conduct
certain site preparation activities on the Real Property in anticipation of the
1999-2000 planting season. Purchaser agrees that Purchaser will directly benefit
from such site preparation activities and will reimburse Seller on a
dollar-for-dollar basis at Closing for the reasonable and verifiable costs
incurred by Seller in connection therewith; provided, however, the amount of
such reimbursement shall not exceed $1,500,000.00.
10 Brokerage. At the Closing, Seller will pay to Donaldson, Lufkin &
Jenrette, Inc. ("DLJ") and Warburg Dillon Read LLC ("WDR") certain commissions,
fees and/or expenses pursuant to the terms of a separate agreement. At the
Closing, Purchaser will pay to Credit Suisse First Boston Corporation ("CS First
Boston") certain fees and expenses pursuant to the terms of a separate
agreement. Seller and Purchaser each warrant and represent to the other that,
except for the aforesaid amounts payable to DLJ, WDR, and CS First Boston,
neither has incurred any liability for any brokerage or finder's commission, fee
or expense in connection with the execution and delivery of this Agreement or
the consummation of the transactions contemplated hereby. Seller and Purchaser
each agree to indemnify and hold harmless the other from any and all damage,
loss, liability, expense, cost and claim (including but not limited to
attorneys' fees and court costs) arising with respect to any such commission,
fee or expense which may be suffered by the indemnified party by reason of any
action or agreement of the indemnifying party. The foregoing indemnification
provision will survive the Closing and will survive any termination of this
Agreement. The indemnification obligations of the parties set forth in this
paragraph 10 shall not be subject to the limitations of paragraph 8(d) above.
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11 Prorations; Taxes; Expenses.
(a) Ad valorem real property taxes on the Real Property,
amounts paid or payable by Seller pursuant to the Real Property Leases for any
applicable period in which the Closing occurs and rents or fees received or
receivable by Seller pursuant to the Incidental Leases for any applicable period
in which the Closing occurs will be prorated between Seller and LLC as of the
date of Closing. If actual tax bills for the calendar year of Closing are not
available, said taxes will be prorated based on tax bills for the previous
calendar year and such proration will be final. If any portion of the Real
Property is not designated as a separate tax parcel, said taxes will be adjusted
to an amount bearing the same relationship to the total tax bill which the
acreage contained within such portion of the Real Property bears to the acreage
contained within the property included within said tax bill.
(b) Purchaser will pay (i) all costs and expenses for any
title examinations and all title insurance premiums and other charges in
connection with any title insurance policy or policies obtained by Purchaser or
LLC, and (ii) all costs and expenses in connection with any inspections,
examinations, tests, surveys, cruises or assessments performed by or for
Purchaser.
(c) "Transfer Taxes" shall mean all documentary stamp taxes,
document recording taxes or fees, realty transfer taxes and any other similar
taxes or fees in connection with Seller's transfer of the Property to LLC,
Seller's transfer of the membership interests in LLC to Purchaser, and the
subsequent liquidation, if any, of LLC within one year following the date of the
Closing or in connection with the recording of the Deeds and the Assignments.
Transfer Taxes shall be shared equally by Purchaser and Seller; provided,
however, Purchaser's liability for the payment of Transfer Taxes shall not
exceed one-half of the amount of any and all documentary stamp taxes, document
recording taxes or fees, realty transfer taxes and any other similar taxes or
fees as would have been due if Seller had conveyed title to the Property
directly to Purchaser. This limitation on the amount of taxes to be paid by
Purchaser shall in no way limit the amount of any penalties or interest payable
by Purchaser on any portion of the Transfer Taxes payable by Purchaser. Seller
and Purchaser shall participate jointly in determining their respective
obligations with respect to Transfer Taxes, and in pursuing any reasonable
refund claims for Transfer Taxes paid or reasonable challenges to assessments of
Transfer Taxes. All costs, including legal fees, of any such refund claims or
challenges shall be shared equally by Purchaser and Seller in the ratio in which
each would benefit from such refund claim or challenge. Further, Seller shall
indemnify Purchaser for any additional federal or state income tax liabilities
arising from any action by Seller or the LLC prior to the date of the Closing
which causes the LLC to be classified as a corporation under section 7701 of the
Internal Revenue Code of 1986, as amended. The provisions of this paragraph
11(c) shall expressly survive the Closing.
(d) Each party will pay its respective costs and expenses of
its legal, accounting and other professional advisors.
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(e) Purchaser shall be solely responsible and liable for any
and all taxes, assessments and similar charges (including any and all fines,
penalties and interest charges in connection therewith) that may be levied,
assessed, recaptured or otherwise imposed with respect to the Property or any
part thereof for any period before or after the Closing which result from or
arise out of any change in the use of, or other change in circumstances relating
to, the Property or any part thereof after the date of Closing.
(f) The provisions of this paragraph 11 will survive the
Closing and will not be subject to the limitations of paragraph 8(d) above.
12 Hart-Scott-Rodino. Seller and Purchaser acknowledge that the
transaction contemplated by this Agreement may be subject to the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the "HSR
Act"), and it will be a condition to the Closing hereunder that the parties
obtain such approvals as may be required under the HSR Act. If Purchaser
determines that a filing must be made under the HSR Act, Purchaser agrees that
it will cause such filing to be made within ten (10) business days after the
Effective Date of this Agreement. The parties agree to cooperate in good faith
in exchanging relevant information and filing any documents required under the
HSR Act, and each party will bear its own costs, fees and expenses in making
such filing, provided that any filing fees payable in connection with such
filings shall be shared equally by Purchaser and Seller. The date of Closing
will be extended as necessary to obtain any such required approvals; provided,
however, if any approval required under the HSR Act has not been received on or
before December 1, 1999, then this Agreement shall automatically terminate,
whereupon no party hereto will have any further rights or obligations hereunder,
except as may otherwise be expressly provided herein.
13 Default; Remedies. If the purchase and sale of the Property
contemplated hereby is not consummated because of a default under this Agreement
by Purchaser or Seller, then the other party shall have the right, at its
option, (a) to terminate this Agreement, whereupon neither party will have any
further rights or obligations hereunder, except as may otherwise be expressly
provided herein, or (b) to exercise any and all rights and remedies available at
law or in equity, including, without limitation, an action or suit for monetary
damages and/or specific performance.
14 Assignment; Continuing Liability.
(a) Neither party hereto will have the right to assign its
rights or obligations under this Agreement, in whole or in part, without the
prior written consent of the other party. Any attempted assignment in violation
of this paragraph will be deemed null and void. Notwithstanding the foregoing,
Purchaser shall have the right to assign its interest in this Agreement without
the prior consent of Seller to any entity which owns substantially all of
Purchaser's existing U.S. timberlands; provided, however, Purchaser shall
provide Seller with an executed copy of any and all assignment and assumption
documentation promptly upon complete execution and delivery of same. Further
notwithstanding the foregoing, Seller shall have the right to assign its
interest in this Agreement without the prior consent of Purchaser to a newly
created limited liability company, wholly owned
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by Seller, which shall acquire the Membership Interests from Seller at or prior
to Closing; provided, however, Seller shall provide Purchaser with an executed
copy of any and all assignment and assumption documentation promptly upon
complete execution and delivery of same.
(b) Following any such assignment by Seller, (i) Jefferson
Smurfit Corporation (U.S.) ("JSC") shall retain all rights to the Reserved
Timber, (ii) JSC shall retain all rights to the Reserved Minerals, the Reserved
Mineral Rights and the OGM Leases, (iii) the Timber Cutting Agreement shall be
executed by and run to the benefit of JSC, and (iv) the Seedling Agreement shall
be executed by and be binding upon JSC.
(c) Upon any assignment of this Agreement by Purchaser
pursuant to the provisions of this paragraph, Rayonier Inc. and each assignee of
this Agreement shall remain jointly and severally liable to Seller and any other
person or entity related to or affiliated with Seller who is expressly
benefitted under this Agreement (collectively, the "Seller Parties") for and
with respect to, and shall guaranty the performance of all obligations arising
under, all indemnifications, representations, warranties and other obligations
of Purchaser set forth in this Agreement (collectively, "Purchaser's
Obligations").
(d) Upon any assignment of this Agreement by Seller pursuant
to the provisions of this paragraph, JSC and each assignee of this Agreement
shall remain jointly and severally liable to Purchaser and any other person or
entity related to or affiliated with Purchaser who is expressly benefitted under
this Agreement (including, without limitation, the LLC) (collectively, the
"Purchaser Parties") for and with respect to, and shall guaranty the performance
of all obligations arising under, all indemnifications, representations,
warranties and other obligations of Seller set forth in this Agreement
(collectively, "Seller's Obligations").
(e) The Purchaser Parties shall not be entitled to make any
claim against any Seller Party with respect to Seller's Obligations after the
appropriate Claims Period (as defined below); provided, however, that if prior
to the close of business on the last day of the Claims Period, the Seller
Parties shall have been notified of a claim hereunder and such claim shall not
have been finally resolved or disposed of at such date, the basis for such claim
shall continue to survive with respect to such claim and shall remain a basis
for recovery hereunder with respect to such claim until such claim is finally
resolved or disposed of in accordance with the terms hereof; provided that the
Purchaser Parties and Seller Parties shall use reasonable efforts to resolve
promptly any such claim.
(f) The Seller Parties shall not be entitled to make any claim
against any Purchaser Party with respect to Purchaser's Obligations after the
appropriate Claims Period (as defined below); provided, however, that if prior
to the close of business on the last day of the Claims Period, the Purchaser
Parties shall have been notified of a claim hereunder and such claim shall not
have been finally resolved or disposed of at such date, the basis of such claim
shall continue to survive with respect to such claim and shall remain a basis
for recovery hereunder with respect to such claim until such claim is finally
resolved or disposed of in accordance with the terms
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hereof; provided that the Purchaser Parties and Seller Parties shall use
reasonable efforts to resolve promptly any such claim.
(g) Claims to be made by the Purchaser Parties or the Seller
Parties hereunder (the party desiring to make such a claim being referred to
herein as a "Claiming Party" and the party against whom such claim is made being
referred to herein as a "Responding Party") shall be made in accordance with the
following procedures:
(i) Promptly after receipt by a Claiming Party of
notice by a third party of any complaint or the commencement of any
action or proceeding with respect to which recovery is being sought
hereunder, such Claiming Party shall notify the Responding Party of
such complaint or of the commencement of such action or proceeding;
provided, however, that failure to so notify the Responding Party shall
not relieve the Responding Party from liability for such claim arising
otherwise than under this Agreement and such failure to so notify the
Responding Party shall relieve the Responding Party from liability
which the Responding Party may have hereunder with respect to such
claim if, but only if, and only to the extent that, such failure to
notify the Responding Party results in the forfeiture by the Responding
Party of material rights and defenses otherwise available to the
Responding Party with respect to such claim. The Responding Party shall
have the right, upon written notice by the Responding Party to the
Claiming Party, to assume the defense of such action or proceeding,
including the employment of counsel reasonably satisfactory to the
Claiming Party and the payment of the reasonable fees and disbursements
of such counsel as incurred. If the Responding Party does not elect to
assume control of the defense of any such claims, the Responding Party
shall be bound by the results otherwise obtained with respect to such
claim. In the event, however, that the Responding Party declines or
fails to assume the defense of the action or proceeding or to employ
counsel reasonably satisfactory to such Claiming Party, in either case
in a timely manner, then the Claiming Party may employ counsel to
represent or defend it in any such action or proceeding and the
Responding Party shall pay the reasonable fees and disbursements of
such counsel as incurred; provided, however, that the Responding Party
shall not be required to pay the fees and disbursements of more than
one counsel for all the Claiming Parties in any jurisdiction in any
single action or proceeding. In any action or proceeding with respect
to which recovery is being sought hereunder, the Claiming Party or the
Responding Party, whichever is not assuming the defense of such action,
shall have the right to participate in such litigation and to retain
its own counsel at such party's own expense. The Claiming Party or the
Responding Party, as the case may be, shall at all times use reasonable
efforts to keep the Responding Party or the Claiming Party, as the case
may be, reasonably apprised of the status of the defense of any claim
the defense of which they are maintaining, and to cooperate in good
faith with each other with respect to the defense of any such action.
(ii) The Claiming Party may not settle or compromise
any claim or consent to the entry of any judgment with respect to which
recovery is being sought from the Responding Party hereunder without
the prior written consent of the Responding Party,
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unless such settlement, compromise or consent includes an unconditional
release of the Responding Party and its affiliates from all liability
arising out of such claim and does not contain any equitable order,
judgment or term which affects, restrains or interferes with the
business of the Responding Party or its successors or assigns. The
Responding Party may not, without the prior written consent of the
Claiming Party, settle or compromise any claim or consent to the entry
of any judgment with respect to which recovery is being sought
hereunder unless such settlement, compromise or consent includes an
unconditional release of the Claiming Party from all liability arising
out of such claim and does not contain any equitable order, judgment or
term which in any material manner affects, restrains or interferes with
the business of the Claiming Party or any of its affiliates.
(iii) In the event that the Claiming Party shall
claim a right to payment pursuant to this Agreement, such Claiming
Party shall send written notice of such claim to the Responding Party.
Such notice shall specify the basis for such claim. As promptly as
possible after the Claiming Party has given such notice, the Claiming
Party and the Responding Party shall establish the merits and amount of
such claim (by mutual agreement, litigation, arbitration, meditation or
otherwise) and, within ten (10) business days of the final
determination of the merits and amount of such claim, the Responding
Party shall deliver an amount of cash to the Claiming Party as
appropriate to satisfy and discharge in full such claim as determined
hereunder.
(h) Except as provided in this paragraph or elsewhere in this
Agreement, no claim may be asserted with respect to the Purchaser's Obligations
or Seller's Obligations by the Purchaser Parties or the Seller Parties after the
end of the claims period (the "Claims Period") which shall commence on the date
of Closing and terminate five (5) years thereafter; provided, however, that the
Claims Period with respect to (a) Purchaser Losses arising out of or pursuant to
any breach by Seller of the representations and warranties in paragraphs 8(a)(i)
through (iv) and 8(a)(vi)(A) through (J) of this Agreement shall commence of the
date hereof and terminate eighteen (18) months thereafter, (b) Purchaser Losses
arising out of or pursuant to any breach by Seller of the representations and
warranties in paragraphs 8(a)(v)(B) and 8(a)(v)(E) shall commence on the date
hereof and remain in effect without limitation, except as limited by law, and
(c) Seller Losses arising out of or pursuant to any breach by Purchaser of the
representations and warranties in paragraphs 8(b)(i) through (v) of the Purchase
Agreement shall commence on the date hereof and terminate eighteen (18) months
thereafter.
(i) By the execution and delivery of this Agreement, each of
Seller (on behalf of the Seller Parties) and Purchaser (on behalf of the
Purchaser Parties) irrevocably designates and appoints each of the parties set
forth under its name or designation below as its authorized agent(s) upon which
process may be served in any suit or proceeding arising out of or relating to
this Agreement that may be instituted in any state of federal court in the
States of Alabama, Georgia or Florida.
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<PAGE> 26
Seller (on behalf of the Seller Parties):
Jefferson Smurfit Corporation (U.S.)
c/o Smurfit-Stone Container Corporation
8182 Maryland Avenue
St. Louis, Missouri 63105
Attention: Craig Hunt, General Counsel
Purchaser (on behalf of the Purchaser Parties):
Rayonier Inc.
1177 Summer Street
Stamford, Connecticut 06905-5529
Attention: Lisa M. Palumbo, Vice President and
General Counsel
In addition, Responding Party submits to the personal
jurisdiction of any such court in any such suit or proceeding, and agrees that
service of process upon the above-designated individuals shall be deemed in
every respect effective service of process upon such Responding Party in any
such suit or proceeding. Each such Responding Party further agrees to take any
and all action reasonably requested by a Claiming Party hereunder, including the
execution and filing of any and all such documents and instruments, as may be
necessary to continue such designation and appointment of the above-designated
individuals in full force and effect or to provide for an appropriate
substitution for such agents. The foregoing shall not limit the rights of any
party to serve process in any other manner permitted by law.
(j) To the extent that any Responding Party has or hereafter
may acquire any immunity from jurisdiction of any court or from any legal
process (whether through service or notice, attachment prior to judgment,
attachment in aid of execution, or otherwise) with respect to itself or its
property, each Responding Party hereby irrevocably waives such immunity in
respect of its obligations with respect to this Agreement.
(k) The parties hereto agree that an appropriate forum and
venue for any disputes between any of the parties hereto arising out of this
Agreement shall be any state or federal court in the States of Alabama, Georgia
or Florida. The foregoing shall not limit the rights of any party to obtain
execution of judgment in any other jurisdiction. The parties further agree, to
the extent permitted by law, that a final and unappealable judgment against any
of them in any action or proceeding contemplated above shall be conclusive and
may be enforced in any other jurisdiction within or outside the United States by
suit on the judgment, a certified or exemplified copy of which shall be
conclusive evidence of the fact and amount of such judgment.
(l) The provisions of this paragraph 14 shall expressly
survive the Closing. Each of Purchaser, Seller. JSC and Rayonier Inc. shall
execute and deliver at Closing a written confirmation at the obligations assumed
and agreed to by the parties under this paragraph 14.
26
<PAGE> 27
15 No Waiver. No action or failure to act by any party hereto will
constitute a waiver of any right or duty afforded to such party under this
Agreement, nor will any such action or failure to act constitute an approval of
or acquiescence in any breach of this Agreement except as may be specifically
agreed in writing.
16 Governing Law. This Agreement will be governed by the laws of the
States of Georgia, Florida and Alabama as to those portions of the Real Property
located in such states.
17 Notice. Any and all notices, elections and communications required
or permitted by this Agreement will be made or given in writing and will be
delivered in person, sent by reputable overnight courier, or sent by postage
prepaid United States mail, certified or registered, return receipt requested,
to the other parties at the addresses set forth below, or such other address as
may be furnished by notice in accordance with this paragraph. The date of notice
given by personal delivery will be the date of such delivery. The effective date
of notice by overnight courier or by mail will be the date such notice is
received by the addressee.
Seller: Jefferson Smurfit Corporation (U.S.)
c/o Smurfit-Stone Container Corporation
8182 Maryland Avenue
St. Louis, Missouri 63105
Attention: Craig A. Hunt, Vice President and
General Counsel
with a copy to: Sutherland Asbill & Brennan LLP
999 Peachtree Street, NE
Suite 2300
Atlanta, GA 30309-3996
Attention: William H. Bradley, Esq.
Purchaser: Rayonier Inc.
1177 Summer Street
Stamford, Connecticut 06905-5529
Attention: Lisa M. Palumbo
Vice President and General Counsel
with a copy to: King & Spalding
191 Peachtree Street, N.E.
Atlanta, Georgia 30303-1763
Attention: Robert G. Pennington, Esq.
27
<PAGE> 28
18 Entire Agreement. This Agreement contains the entire agreement among
the parties hereto with respect to the subject matter hereof and cannot be
amended or supplemented except by a written agreement signed by all parties.
19 Captions. The captions of paragraphs in this Agreement are for
convenience and reference only and are not part of the substance hereof.
20 Severability. In the event that any one or more of the provisions,
paragraphs, words, clauses, phrases or sentences contained in this Agreement, or
the application thereof in any circumstance is held invalid, illegal or
unenforceable in any respect for any reason, the validity, legality and
enforceability of any such provision, paragraph, word, clause, phrase or
sentence in every other respect and of the remaining provisions, paragraphs,
words, clauses, phrases or sentences of this Agreement, will not be in any way
impaired, it being the intention of the parties that this Agreement will be
enforceable to the fullest extent permitted by law.
21 Counterparts. This Agreement may be executed in counterparts which
will be construed together as one instrument.
22 No Third Party Beneficiaries; Binding Effect. This Agreement is for
the sole benefit of the parties hereto and their permitted assigns and nothing
contained herein will give or be construed to give to any party, other than the
parties hereto and such permitted assigns, any legal or equitable rights
hereunder. Subject to the foregoing and the provisions of paragraph 14 above,
this Agreement will be binding upon and will inure to the benefit of the parties
hereto and their respective heirs, legal representatives, successors and
assigns.
23 Time of Essence. Time is of the essence of this Agreement.
24 No Survival. Except to the extent otherwise expressly provided in
this Agreement, the provisions of this Agreement will not survive any
termination of this Agreement and will not survive the Closing and will be
merged into the documents executed and delivered and the payment of all amounts
made at the Closing.
25 Determination of Value; Arbitration.
(a) Either Seller or Purchaser may require that any
determination of value contemplated in this Agreement be submitted to
arbitration pursuant to this paragraph 25.
(b) The party desiring such arbitration shall give notice to
that effect to the other party. As soon as possible, but in any event within the
next five (5) days, Seller and Purchaser shall each select one arbitrator. As
soon as possible, but in any event, within the next five (5) days, the two
arbitrators so selected shall select a third arbitrator. No arbitrator shall be
an employee, officer, director, shareholder, member, partner or other affiliate
of either party. In the event of the failure, refusal or inability of any
arbitrator to act, a new arbitrator shall be appointed in his stead, which
28
<PAGE> 29
appointment shall be made in the same manner as hereinbefore provided. At the
request of either party, the arbitrators shall authorize the service of
subpoenas for the production of documents or attendance of witnesses.
(c) Each arbitrator shall be either (i) a partner, principal
or senior executive of a regionally recognized forest management firm having
substantial experience in the valuation of timberland and timber in the
southeastern United States, or (ii) an appraiser associated with a regionally
recognized real estate appraisal firm who is a member of the American Institute
of Real Estate Appraisers (or the successor organization, or if no such
organization exists, then an organization composed of persons of similar
professional qualifications) and having substantial experience in the valuation
of timberland and timber in the southeastern United States, or (iii) in the case
of an arbitration pursuant to paragraph 4(c) hereof relating to the validity of
a Title Objection, a present or former underwriting officer of a nationally
recognized title insurance company having at least ten (10) years experience in
underwriting and handling title insurance claims in connection with timberland
or commercial property in the southeastern United States, or an attorney
licensed to practice in the state in which the affected property is situated,
having not less than ten (10) years of practice experience in real estate law in
such state, or (iv) in the case of an arbitration pursuant to paragraph 6(a), an
environmental engineer licensed in the state of the affected property and having
not less than ten (10) years of engineering experience, or an attorney licensed
to practice in the state in which the affected property is situated, having not
less than ten (10) years of practice experience in environmental law in such
state.
(d) Within thirty (30) days after their appointment, the
arbitrators so chosen shall hold a hearing at which each party may submit
evidence, be heard and cross-examine witnesses, with each party having at least
five (5) business days advance notice of the hearing. The hearing shall be
conducted such that each of Seller and Purchaser shall have reasonably adequate
time to present oral evidence or argument, but either party may present whatever
written evidence it deems appropriate prior to the hearing (with copies of any
such written evidence being sent to the other party).
(e) The decision of the arbitrators so chosen shall be given
in writing within a period of ten (10) days after the conclusion of such
hearing. The decision in which any two arbitrators so appointed and acting
hereunder concur shall in all cases be binding and conclusive upon the parties.
(f) The fees and expenses of the arbitration proceeding and
the fees of the third arbitrator appointed under this paragraph 25 shall be
borne equally by Seller and Purchaser. Seller and Purchaser each shall pay the
fees of the arbitrator each selected, and the fees and expenses of preparing and
presenting its own case. Seller and Purchaser may at any time by mutual written
agreement discontinue arbitration proceedings and themselves agree upon any such
matter submitted to arbitration.
29
<PAGE> 30
26 Incorporation of Exhibits. All exhibits referred to herein are
hereby incorporated in this Agreement by this reference.
27 No Publicity. Neither Purchaser nor Seller shall make any public
announcement or otherwise publicly disseminate any information with respect to
this Agreement or the transactions contemplated hereby without the prior written
consent of the other party hereto.
28 Effective Date. The effective date (the "Effective Date") of this
Agreement will be the last date on which all parties hereto shall have executed
this Agreement, as indicated below.
29 Deletion of Real Property. Purchaser and Seller agree that the
following provisions shall be taken into consideration in determining the size
and configuration of any portions of the Owned Real Property which is to be
excluded from the Real Property pursuant to the provisions of paragraphs 4(c)
and/or 6(a) above: (a) no parcel or site excluded shall be of a size less than
five (5) acres without the prior approval of Seller; (b) each parcel so excluded
shall retain or be granted commercially reasonable access either directly to a
public road or over the Real Property acquired by Purchaser; (c) if access is
retained or granted over the Real Property acquired by Purchaser, such access
shall not materially or adversely affect Purchaser's use and operation of the
Real Property, and shall be in a location reasonably acceptable to Purchaser;
(d) in determining the size and configuration of the tract or tracts to be
excluded, Seller may elect to exclude an area which is up to 125% of the area
actually impacted or affected by the Title Objection or the Environmental
Condition, as the case may be, in order to ensure that the excluded tract or
tracts retain economic viability; (e) Purchaser shall retain approval rights
over the size (subject to the five-acre minimum described in clause (a) above),
configuration and means of access of any tract proposed to be excluded from the
Real Property pursuant to paragraphs 4(c) and 6(a) hereof, which approval shall
not be unreasonably withheld; (f) all tracts excluded pursuant to paragraphs
4(c) and 6(a) hereof shall be subject to restrictive covenants (to be agreed to
by the parties) which shall prohibit Seller and its successors-in-title from
operating landfills or other noxious uses which are inconsistent with, or which
could unreasonably interfere with, Purchaser's timber operations on its adjacent
Real Property; and (g) Purchaser shall be granted a right of first offer in the
event Seller ever elects to sell or otherwise dispose of any excluded tract or
tracts. If the Title Objection or Environmental Condition in question impacts a
portion of the Real Property which is a portion of the Leased Real Property,
then the Real Property Lease covering such portion of the Real Property shall be
deleted, and all of the Leased Real Property covered by such Real Property Lease
shall be deemed deleted from the Real Property.
30 Property to be Excluded. Purchaser acknowledges and agrees that
prior to Closing (a) Seller may elect to carve out up to 1,000 acres of the Real
Property in Alachua County, Florida near the University of Florida to facilitate
a settlement of the AFIDA Proceeding described on Exhibit J hereto; and (b) may
convey in lieu of condemnation up to 300 acres of the Real Property to Alabama
Power Company. If the conveyance described in clause (a) above occurs prior to
Closing, then the Purchase Price shall be reduced by the fair value of the Real
Property conveyed, as determined by the agreement of the parties or pursuant to
the provisions of paragraph 25 hereof. If
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<PAGE> 31
the conveyance described in clause (b) above occurs prior to Closing, then the
Purchase Price shall be reduced by the greater of (i) the fair value of the Real
Property conveyed, as determined by the agreement of the parties or pursuant to
the provisions of paragraph 25 hereof, or (ii) the net proceeds received by
Seller from Alabama Power Company as consideration for said conveyance.
[End of Text]
31
<PAGE> 32
IN WITNESS WHEREOF, this Agreement has been duly executed, sealed and
delivered by the parties hereto on the date(s) indicated below.
PURCHASER:
Date of execution: 7/28/99 RAYONIER INC.
By: /s/ W.L. Nutter
Title: Chairman of the Board,
President and
Chief Executive Officer
SELLER:
Date of execution: 7/28/99 JEFFERSON SMURFIT CORPORATION (U.S.)
By: /s/ Raymond M. Curran
Title: President & Chief
Executive Officer
32
<PAGE> 1
EXHIBIT 2.2
FIRST AMENDMENT TO PURCHASE AND SALE AGREEMENT
This Amendment (this "Amendment") is entered into as of the 25th day of
October, 1999, by and between JEFFERSON SMURFIT CORPORATION (U.S.), a Delaware
corporation ("Seller"), and RAYONIER INC., a North Carolina corporation
("Purchaser").
WITNESSETH
WHEREAS, Seller and Purchaser entered into that certain Purchase and Sale
Agreement (the "Agreement") dated as of July 28, 1999, for the purchase and sale
of certain timberlands more particularly described therein; and
WHEREAS, Seller and Purchaser desire to amend the Agreement as provided herein.
NOW, THEREFORE, for and in consideration of the premises set forth herein and
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged by each party hereto, Seller and Purchaser, intending to be
legally bound, do hereby agree as follows:
1. Defined Terms. Unless otherwise defined in this Amendment, terms used herein
with an initial capital letter or initial capital letters shall have the
meanings given them in the Agreement.
2. Purchase Price Reduction. Paragraph 2 of the Agreement is hereby amended by
deleting the number "Seven Hundred Twenty-Five Million and NO/100 DOLLARS
($725,000,000.00)" in line 2 of said Paragraph 2 and substituting in lieu
thereof the number "Seven Hundred Ten Million and NO/100 DOLLARS
($710,000,000.00)." Paragraph 2 is hereby further amended by deleting the number
"Five Hundred Million and NO/100 DOLLARS ($500,000,000.00)" in line 8 of said
Paragraph 2 and substituting in lieu thereof the number "Four Hundred Eighty
Five Million and NO/100 DOLLARS ($485,000,000.00)."
3. Extension of Closing Date. Paragraph 3(a) of the Agreement is hereby amended
by deleting the date "October 15, 1999" in line three of said paragraph 3(a) and
substituting in lieu thereof the date "October 25, 1999."
4. Site Preparation Reimbursement. Paragraph 9(b) is hereby amended by deleting
the number "$1,500,000.00" in the last line of said paragraph 9(b) and
substituting in lieu thereof the number "$1,750,000.00."
5. Closing Deliveries. Paragraph 3(c) of the Agreement is hereby amended by
adding the following new clause (v) in said Paragraph 3(c):
1
<PAGE> 2
"and (v) an assignment with reservation of royalties of the
OGM Leases (hereinafter defined) in form and substance reasonably satisfactory
to Purchaser and Seller pursuant to which Seller shall assign to LLC the OGM
Leases and reserve the royalties thereunder."
6. Exhibits. Exhibit C (Incidental Leases), Exhibit F (Seedling Agreement) and
Exhibit K (Oil, Gas and Mineral Leases) attached to the Agreement are hereby
deleted in their entirety and Exhibit C, Exhibit F and Exhibit K attached to
this Amendment shall be substituted in lieu thereof.
7. No Change in Terms and Conditions. Except as modified herein, the Agreement
is ratified and confirmed and remains in full force and effect.
8. Counterparts. To facilitate execution, this Amendment may be executed in as
many counterparts as may be convenient or required. It shall not be necessary
that the signature of each party appear on each counterpart.
All counterparts shall collectively constitute a single instrument.
[SIGNATURES ON FOLLOWING PAGES]
2
<PAGE> 3
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
as of the date first above written.
SELLER:
JEFFERSON SMURFIT CORPORATION (U.S.), a Delaware
corporation
By: /s/ Leslie T. Lederer
Name: Leslie T. Lederer
Title: Vice President
PURCHASER:
RAYONIER INC., a North Carolina corporation
By: /s/ James M. Rutledge
Name: James M. Rutledge
Title: Vice President - Finance & Taxes
3
<PAGE> 1
EXHIBIT 2.3
ASSIGNMENT AND ASSUMPTION AGREEMENT
-----------------------------------
THIS ASSIGNMENT AND ASSUMPTION AGREEMENT (this "Agreement") is made as of
the 25th day of October between JEFFERSON SMURFIT CORPORATION (U.S.), a Delaware
corporation (the "Assignor"), and TIMBER CAPITAL HOLDINGS LLC, a Delaware
limited liability company ("Assignee").
Reference is made to Purchase and Sale Agreement dated July 28, 1999 (the
"Purchase and Sale Agreement"), between Seller and Rayonier Inc. ("Purchaser"),
as amended by that First Amendment to Purchase and Sale Agreement dated as of
October 25, 1999, between Assignor and Purchaser, and as assigned by Purchaser
to Rayonier Timberlands Operating Company, L.P.
In accordance with Section 14(a) of the Purchase and Sale Agreement, (a)
Assignor does hereby assign to Assignee (the "Assignment") all of its rights,
interests in and to, and obligations under, the Purchase and Sale Agreement, and
(b) Assignee does hereby accept and agree to the Assignment and does hereby
assume all of Assignor's obligations under the Purchase and Sale Agreement.
This Agreement shall be effective as of the date first set forth above.
This Agreement is governed by, and shall be construed and enforced in accordance
with, the laws of the State of New York.
(Signature page follows)
<PAGE> 2
IN WITNESS WHEREOF, the Assignor and the Assignee have executed and
delivered this Agreement as of the date first set forth above.
Assignor: JEFFERSON SMURFIT CORPORATION (U.S.)
By: /s/ Leslie T. Lederer
------------------------------------
Name: Leslie T. Lederer
Title: Vice President
Assignee: TIMBER CAPITAL HOLDINGS LLC
By: Jefferson Smurfit Corporation (U.S.),
as sole member
By: /s/ Leslie T. Lederer
------------------------------------
Name: Leslie T. Lederer
Title: Vice President
<PAGE> 1
EXHIBIT 2.4
ASSIGNMENT
----------
(From Rayonier Inc. to Rayonier Timberlands Operating Company, L.P.)
THIS ASSIGNMENT is made effective as of the 25th day of October, 1999 (the
"Effective Date"), by and between Rayonier Inc. (hereinafter referred to as
"Assignor") and Rayonier Timberlands Operating Company, L.P. ("Assignee").
WHEREAS, Assignor has entered into a Purchase and Sale Agreement (the
"Agreement"), made as of July 28, 1999, by and between Assignor, a North
Carolina corporation, and Jefferson Smurfit Corporation (U.S.), a Delaware
corporation ("JSC"), as amended (said Purchase and Sale Agreement, as so
amended, is herein referred to as the "Agreement"); and
WHEREAS, Assignor desires to contribute to the Assignee (i) a 98.8% of its
member interests in Rayland, L.L.C. and (ii) all of its interest in certain
timberlands located in Florida, Georgia, South Carolina and Washington
(hereinafter referred to as the "Assigned Interest"), in exchange for a limited
partnership interest in the Assignee; and
WHEREAS, Assignor desires to assign to Assignee all of its right, title
and interest in and to the Agreement; and
WHEREAS, Assignor and Assignee now desire to enter into this written
Assignment to evidence the foregoing assignments.
NOW, THEREFORE, for and in consideration of Ten Dollars ($10.00) and other
good and valuable consideration, the receipt and sufficiency of which are
acknowledged by the parties, the parties hereby agree as follows:
1. Assignor has assigned, transferred, conveyed and delivered, and by
these presents does hereby assign, transfer, convey and deliver to Assignee
effective as of the Effective Date, the Assigned Interest.
2. Assignee has accepted, and by these presents does hereby accept
effective as of the Effective Date, the Assigned Interest.
3. Assignor has assigned, transferred, conveyed, sold and set over and by
these presents does hereby assign, transfer, convey, sell and set over into
Assignee all of Assignor's right, title and interest in and to the Agreement.
Assignee accepts such assignment and assumes and agrees to perform all of the
duties, obligations, liabilities and responsibilities of Assignor under the
Agreement.
<PAGE> 2
This Assignment is binding upon Assignor and Assignee and shall inure to
the benefit of Assignee and Assignor and their respective legal representatives,
successors and assigns.
"ASSIGNOR"
Rayonier Inc.
By: /s/ Gerald J. Pollack
--------------------------------
Name: Gerald J. Pollack
Title: Senior Vice President and
Chief Financial Officer
"ASSIGNEE"
Rayonier Timberlands Operating
Company, L.P.
By: Rayonier Timberlands
Management Inc., its managing
general partner
By: /s/ Gerald J. Pollack
--------------------------------
Name: Gerald J. Pollack
Title: Senior Vice President
<PAGE> 1
EXHIBIT 2.5
TIMBER CUTTING AGREEMENT
This TIMBER CUTTING AGREEMENT is dated as of October 25, 1999 and is
made by and between R (1999) TIMBERLANDS LLC, a limited liability company
organized under the laws of the State of Delaware, and RAYONIER TIMBERLANDS
OPERATING COMPANY, L.P., a Delaware limited partnership (collectively and
severally, "Seller") and JEFFERSON SMURFIT CORPORATION (U.S.), a Delaware
corporation ("Buyer").
ARTICLE I
RECITALS
1.01 BACKGROUND. Seller is the fee simple owner and lessee of
certain timberlands located in the states of Florida, Georgia and Alabama.
Buyer owns and operates paper mills located in Fernandina, Florida, and
Brewton, Alabama. The aforesaid timberlands have been a principal source of
pulpwood used in the operation of the Mills.
1.02 PURPOSE OF AGREEMENT. The parties wish by this agreement to
contract for the purchase of timber from the Timberlands.
ARTICLE II
DEFINITIONS
The following terms used in this Agreement will have the following
meanings (unless otherwise expressly provided herein):
"AFFILIATE" of a Person means any other Person directly, or through one
or more other intermediaries indirectly, controlling, controlled by or under
common control with the first Person.
"AGREEMENT" is this Timber Cutting Agreement, as modified or amended
from time to time.
"BREWTON MILL" is the paper mill located in Brewton, Alabama that Buyer
owns and operates.
"BUYER" is Jefferson Smurfit Corporation (U.S.), a Delaware corporation.
"DESIGNATION AND PRICING FORM" shall mean the form of Designation and
Pricing Form for each Tract substantially in the form of Exhibit C attached
hereto.
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<PAGE> 2
"DISPUTE" includes any dispute, controversy or claim arising out of or
relating to this Agreement.
"FERNANDINA MILL" is the paper mill located in Fernandina, Florida that
Buyer owns and operates.
"FORCE MAJEURE" means any cause, condition or event beyond a party's
reasonable control that delays or prevents such party's performance of its
non-monetary obligations hereunder, including war, acts of government, acts
of public enemy, riots, civil strife, lightning, fires, explosions, storms,
floods, power failures, other acts of God or nature, major equipment failure,
labor strikes, lockouts or other dispute, and other similar events or
circumstances; provided, however, that adverse financial or market conditions
and generally applicable legislation shall not constitute a Force Majeure.
"INDEPENDENT CONSULTANT" is any of the following forestry consultants:
Larson & McGowan, Sizemore & Sizemore, F&W Forestry, Canal Forest Resources
and Resource Management, Inc.
"MILLS" are, collectively, the Fernandina Mill and the Brewton Mill.
"PERSON" means any individual, sole proprietorship, trust, estate,
executor, legal representative, unincorporated association, institution,
corporation, company, partnership, limited liability company, limited
liability partnership, joint venture, government (whether national, federal,
state, county, city, municipal or otherwise, including, without limitation,
any instrumentality, division, agency, body or department thereof) or other
entity.
"RESERVED TIMBER" shall mean the standing merchantable pine timber
situated on the commercial forest land described in Exhibit B hereto.
"SELLER" is, collectively and severally, R (1999) Timberlands LLC, a
Delaware limited liability company, and Rayonier Timberlands Operating
Company, L.P., a Delaware limited partnership, and their respective
successors and assigns.
"TERM" shall mean the term of this Timber Cutting Agreement as provided
in Article VIII.
"TIMBER" is any and all merchantable timber standing, growing, laying
or being on the Timberlands which meets the specifications set forth in each
Designation and Pricing Form.
"TIMBERLANDS" are the approximately 1,800,000 acres of commercial
forest land owned by Seller in the states of Florida, Georgia and Alabama, as
more specifically described in Exhibit A hereto.
2
<PAGE> 3
"TRACT" or "TRACTS" are tracts of commercial forest land comprising
portions of the Timberlands.
ARTICLE III
RIGHTS AND OBLIGATIONS
3.01 AGREEMENT. Seller hereby grants to Buyer the right to sever and
remove the designated Timber on all Tracts designated by Seller in accordance
with Article IV, and Buyer agrees to sever and remove such Timber.
3.02 RISK OF LOSS. Seller retains all risk of loss, damage, or injury
to the Timber by fire, windstorm, pestilence, act of God, act of government
or other casualty not caused by the negligence or willful acts of Buyer, its
agents, employees or contractors, until it is severed and removed from the
Timberlands by or on behalf of Buyer.
3.03 TITLE. Upon severance and removal from the Timberlands of any
portion of the Timber, title to and ownership of such Timber shall pass to
Buyer free and clear of all liens and encumbrances.
3.04 SCALING. Volumes will be based on gross tons of wood shown on
scale tickets. Seller will provide Buyer with load tickets which will
operate as a record for the Timber harvested under this Agreement. Such load
tickets will be sequentially numbered documents in multiple part forms.
Buyer will be responsible for completing the pertinent information on the
form for each load, attaching one part of the load ticket to the load of
Timber at the loading site, and depositing another part of the ticket into a
lock box on the Tract from which the Timber is harvested. Buyer shall have
the load weighed across any state certified or forest products industry
scale, with the scale weight recorded on a written scale ticket. Buyer shall
attach the third part of the load ticket to the corresponding scale ticket.
The scale tickets and the corresponding load tickets for each week's
deliveries, along with a cutting report and sales record recapping the timber
types, weights and payment classification shall be forwarded to Seller as
provided below. Buyer shall remit to Seller not later than Friday of each
week following a week during which Buyer has removed Timber from the
Timberlands, a check made payable to Seller for the full price of the Timber
cut and removed during the preceding week. Each payment shall be accompanied
by a cutting report and sales record which will be provided by Seller. Such
cutting report and sales record will detail the products removed during the
prior week. The original (white) cutting report and sales record with scale
tickets and payment attached shall be mailed to:
Southeast Forest Resources
Post Office Box 728
4 North 2nd Street
Fernandina Beach, Florida 32035-0728
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The second copy (canary) is to be sent to the appropriate Seller supervisor.
The third copy (pink) is for Buyer's records.
If Buyer fails to produce load tickets and scale tickets that
correspond to all load tickets deposited in the lock box, Buyer shall pay
Seller $1,000 for each missing ticket. Any load tickets issued to the Buyer
which are unused at completion of the sale must be returned to Seller.
3.05 RESERVED TIMBER. Buyer shall have the unrestricted right to
sever and remove the Reserved Timber without paying Seller therefor. Buyer's
logging operations with respect to the Reserved Timber shall be performed
pursuant to the provisions of Article V of this Agreement governing logging
operations associated with the Timber.
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ARTICLE IV
TIMBER DESIGNATION AND PRICE DETERMINATION
4.01 TRACT DESIGNATION.
(a) During each of calendar years 2000 and 2001, Seller shall
designate to Buyer one or more Tracts within the supply area of the
Fernandina Mill on which sufficient pine timber is available for
harvest to produce 1,275,000 tons, and Seller shall designate one or
more Tracts within the supply area of the Brewton Mill on which
sufficient pine timber is available for harvest to produce 560,000
tons. Prior to Seller's designating any Tract, both Seller and Buyer
must have received the timber cruise data for the Tract from the
Independent Consultant as provided in Section 4.02.
(b) Tracts designated by Seller shall represent an estimated
aggregate volume of one hundred ten percent (110%) of the annual volume
commitments set forth in Section 4.01(a) above for the relevant
calendar year. Tract selection will be made by district, including six
(6) or seven (7) districts that are logical combinations of Buyer's
historic districts with those of Seller in the Fernandina region, and
three new districts in Alabama. Taking into account Seller's objective
of having Timber harvested with respect to a designated Tract within
the calendar year of designation, and Buyer's objective of achieving
Timber harvests consistent with Buyer's supply and production
requirements, Seller and Buyer shall collaborate in good faith to
achieve a mutually acceptable schedule of Tract designations. The
total volume of Timber on the Tracts designated in any calendar year
will be prorated among the districts in approximate proportion to each
district's share of the total volume scheduled for harvest in such
calendar year from the Timberlands. The mix of Tracts designated will
fairly represent the mix of Tracts available for harvest within each
district of the Timberlands, except that, upon agreement of Seller and
Buyer the designated Timber may, in the aggregate, contain a higher
than average percentage of pulpwood.
4.02 TIMBER CRUISES. Prior to Tract designation by Seller, an
Independent Consultant mutually selected by Buyer and Seller shall conduct a
cruise of each Tract selected by Seller to determine the species and product
mix and estimated volume of Timber on the Tract. Such Independent Consultant
shall deliver all such cruise data for each cruised Tract to both Seller and
Buyer upon completion of the cruise of the Tract. The cost of all such
timber cruises shall be divided and paid equally by Seller and Buyer.
4.03 BUYER'S RIGHT OF REFUSAL. After receiving designation of a Tract
from Seller and prior to submitting its proposed stumpage prices to the
Independent Consultant for determination under Section 4.04(b) below, Buyer
shall have the right to decline to purchase the Timber on such Tract as long
as the volume offered on all Tracts previously declined by Buyer under this
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Section 4.03 during the calendar year does not exceed ten percent (10%) of
the annual volume commitments set forth in Section 4.01 above. Likewise,
after designating a Tract to Buyer and prior to submitting its proposed
stumpage prices to the Independent Consultant for determination under Section
4.04(b) below, Seller shall have the right to decline to sell the Timber on
such Tract as long as the volume offered on all Tracts previously declined by
Seller under this Section 4.03 during the calendar year does not exceed ten
percent (10%) of the annual volume commitments set forth in Section 4.01
above; provided, however, Seller's obligation to designate Tracts on which
sufficient volumes are available pursuant to the provisions of Section
4.01(a) shall remain in full force and effect. Any decision not to sell or
buy Timber with respect to an assigned Tract on the part of Seller or Buyer
under the provisions of this Section 4.03 shall result in neither party
having the obligation to sell or buy such Timber, as the case may be.
4.04 STUMPAGE PRICE DETERMINATIONS. The stumpage price for the Timber
will be determined separately for the Timber on each designated Tract in
accordance with this Section 4.04.
(a) After a Tract is designated by Seller pursuant to Section
4.01, Buyer and Seller shall first negotiate in good faith to determine
composite stumpage prices for each species of Timber on the designated
Tract.
(b) If the parties cannot agree on stumpage prices within
fourteen (14) days after the date the Seller designates a Tract, Buyer
shall submit to the Independent Consultant the stumpage prices at which
it is willing to purchase the Timber on the Tract, and Seller shall
submit to the Independent Consultant the stumpage prices at which it is
willing to sell the Timber on the Tract. Taking into account all
available comparable sales and other data relevant to determine the
fair market value of such Timber, the Independent Consultant shall
select whichever of the two stumpage prices submitted by the parties
more closely reflects the fair market value of the designated Timber.
4.05 DESIGNATION AND PRICING FORM. Once the Seller has designated a
Tract and the stumpage prices have been determined in accordance with Section
4.04, the parties shall execute a Designation and Pricing Form for the
Tract. Once executed, the Designation and Pricing Form for the Tract shall
be incorporated as part of this Agreement.
4.06 CUTTING PERIOD. Unless extended as provided below, Buyer shall
have twelve months from the time the Designation and Pricing Form for a Tract
is executed to harvest the Timber on the Tract. If Buyer is prevented during
the twelve-month period from severing and removing the Timber on a Tract
because it reasonably believes there is a Force Majeure affecting the
operations on the Tract, then the twelve-month period shall be extended by a
period equal to the number of days Buyer was required to suspend its
operations as a result of the Force Majeure, provided that Buyer gives notice
to Seller within seven (7) days of suspension of its operations describing
the cause of such suspension and the estimated period its operations will be
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suspended. Seller may suspend Buyer's operations on a Tract, without
liability to Buyer, if Seller reasonably believes there is a Force Majeure
affecting operations on the Tract provided Seller gives written notice to
Buyer describing the cause of such suspension and the estimated period
Buyer's operations will be suspended. If Seller suspends Buyer's operations
on a Tract, the twelve-month cutting period for the Tract will be extended by
the number of days Buyer was required to suspend its operations.
ARTICLE V
LOGGING OPERATIONS
5.01 CONDUCT BY BUYER. Buyer shall conduct all harvesting and road
construction activities in compliance in all material respects with
applicable law, including without limitation environmental, occupational,
labor, health, and safety laws, and good and safe harvest operations, taking
into account the type of timber and terrain in question, and in accordance
with the following requirements.
(a) Buyer shall pay all costs of labor and materials and shall
keep the properties of Seller free from liens and encumbrances.
(b) Buyer shall keep all roads, firebreaks, fields, streams,
and other open areas on the Timberlands free of tops and other logging
debris.
(c) Stump height shall not exceed four (4) inches or the
diameter of the stump, whichever is smaller, as measured from ground
level, except cypress stump height, which shall be at least five (5)
inches, as measured from the ground level, but shall not exceed twenty
(20) inches.
(d) Cutting shall be done only in designated areas.
(e) Buyer shall cut and remove all Timber as defined herein.
(f) No logs, pulpwood or other forest products will be ramped
on graded roads.
(g) At the completion of each day's operations, Buyer shall be
responsible for locking all cables and/or gates unlocked during logging
operations.
(h) Purchaser shall be responsible for initiating and fully
cooperating with Seller in implementing harvesting practices consistent
with recommended Best Management Practices.
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(i) Upon completion of all logging operations on a Tract, Buyer
shall promptly remove all equipment, refuse, wire rope, litter, scrap
and trash brought onto the Tract or deposited along access roads by
Buyer, its agents, contractors or employees. All lunch-box garbage,
empty containers, empty cans or anything of a non-biodegradable nature
shall be removed from the Timberlands on a daily basis.
(j) Buyer shall notify Seller when road construction and/or
harvesting begins on a designated Tract, and shall notify Seller
whenever the harvesting operation moves onto or off of a designated
Tract.
5.02 ACCESS RIGHTS. Seller hereby grants to Buyer, its successors,
assigns, contractors and subcontractors, the right to enter upon designated
Tracts at any and all times during said term with tools, wagons, carts,
trucks, men and equipment and all other conveyances that are necessary for
the preservation, care, cutting and removal of the Timber, together with the
right to operate roads and roadways upon, over and across such Tracts and any
other lands of Seller near or adjacent thereto, where such roads and roadways
are necessary for ingress and egress, and the right to erect temporary
structures upon such Tracts. Buyer shall have and is hereby granted the
right at any time during the Term and for sixty (60) days thereafter, to
remove any and all machinery, equipment and other property (excluding any
claim to timber) of Buyer, whether or not so fixed to the Tracts as to be
regarded in law as a part of the Tracts, provided that the Tracts and other
property are not damaged as a result of such removal.
5.03 ROAD CONSTRUCTION. Buyer shall use existing roads wherever
possible and shall leave all roads in a condition that equals or exceeds
their condition when harvesting began. Buyer shall have the right to build
such temporary roads upon the Timberlands as may be necessary to log the
Timberlands; provided, however, Seller shall have the right to approve the
location of any such temporary roads, which approval shall not be
unreasonably withheld, conditioned or delayed.
5.04 REFORESTATION. Seller shall be responsible for reforestation
work and costs of complying with any State requirements regarding
reforestation.
5.05 TAXES. Seller shall pay all taxes levied against the Timberlands,
including fire patrol tax, during the Term, and Seller shall pay all taxes
levied by reason of Buyer's harvest and removal of the Timber, including without
limitation, any privilege tax. For all or any portions of the Timber growing
upon Tracts in Georgia that is subject to ad valorem assessment by the county in
which the Tract is situated (as required under O.C.G.A. Section 48-5-7.5), for
each calendar quarter in which timber is harvested by Buyer, Buyer shall timely
complete, sign and tender two (2) copies of Form PT-283T. One copy thereof
shall be sent to the Board of Tax Assessors of the county in which the Tract is
situated whereupon Timber was harvested, and the other copy shall be sent to the
following address:
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Rayonier Timberlands Operating Company, L.P.
R (1999) Timberlands LLC
Attention: Manager, Taxes
Post Office Box 728
Fernandina Beach, Florida 32035-0728
Such reports are due within forty-five (45) days after the end of the
calendar quarter and shall include the total of dollar value paid for the
standing Timber harvested on the applicable Tract and the volume in tons by
product harvested on said Tract in the quarter for which the report is being
filed.
5.06 HARVEST AND OTHER PERMITS; RESPONSIBILITY AND COST. Buyer shall
be responsible for obtaining, at Buyer's expense, and in its name or in the
name of Seller, all governmental permits and approvals required to harvest
the Timber from any designated Tract.
5.07 ENVIRONMENTAL COMPLIANCE. Buyer shall, during the period of its
harvest of Timber hereunder, promptly observe and comply with all applicable
laws, ordinances, orders, directives, rules, regulations, and other
requirements of any Federal, State or local governmental authority or agency
having jurisdiction, whether in force at the commencement of this Agreement
or enacted or asserted during the term of this Agreement. Buyer shall
promptly report to Seller any suspected activity on any Tract that violates
or may appear to violate any environmental law, regulation, ordinance or rule
whether state, local or federal. Under no circumstances whatsoever will
Buyer cause any carcinogenic, controlled, toxic or hazardous substance or
material, or permit a container presently holding or formerly holding such
substance(s), to drain, or percolate on or into, or be stored, dumped,
buried, or otherwise contaminate, taint, or affect any Tract from which
Timber is to be cut, or any other land adjacent to or in the vicinity of the
Tract.
5.08 RAILROAD CROSSINGS. Seller does not warrant the condition of the
Timberlands; Buyer enters upon the Timberlands at its sole risk. Seller
HEREBY GIVES NOTICE TO BUYER THAT IT MAY ENCOUNTER UNGUARDED RAILROAD
CROSSINGS THAT DO NOT HAVE AUTOMATIC WARNINGS DEVICES. Seller does not
warrant the condition of the railroad crossings, and Buyer accepts railroad
crossings in an "as is" condition. At all times during the Term, Buyer
agrees to utilize great care and caution when encountering such crossings.
Buyer shall indemnify and save harmless Seller and owner of railroad right of
way in the vicinity of said railroad crossing, their officers, agents and
employees, from and against all liability, claims, loss, damage, expense
(including attorney's fees) or costs for personal injuries (including death)
and/or property damage to whomsoever or whatsoever, occurring or arising in
any manner from Buyer's use of said railroad crossing.
5.09 PENALTY CLAUSE. If Seller finds any undesignated stumpage cut
without the permission of Seller, Buyer shall pay as damages to Seller twice
the stumpage price determined in Section 4.1, or $50.00 per tree for any
marked boundary line tree regardless of size unless said
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tree is specifically designated for cutting. The volume of such penalty stumpage
will be calculated by Seller. If, at the expiration of this Agreement, Seller
finds cut merchantable trees, left in the woods, and if failure to remove was
not due to circumstances beyond the control of Buyer, as determined solely by
Seller, the volume of such trees will be calculated by Seller within thirty (30)
days after the expiration of this Agreement, and the Buyer will pay Seller for
the calculated volume, based on the prices determined in Section 4.04 above, as
though it had been removed. Notification of the calculated volume shall consist
of mailing the notice and invoice to Buyer's representative as set forth in
Section 10.07 Buyer shall hove thirty (30) days after notification by Seller in
which to remove said trees. Title to any trees not removed by the end of said
period shall remain in and/or revert to Seller to then dispose of as it may seem
fit. In the event uncut trees remain at the expiration of the Term, liquidated
damages will be assessed equal to the calculated volume, as determined solely by
Seller, multiplied by twenty-five percent (25%) of the prices determined in
Section 4.04 above.
5.10 HARVEST COMPLETION LETTER. At such time as Buyer has harvested
all Timber from a designated Tract and performed all of its post-harvest
obligations under this Agreement with respect to such Tract, Seller and Buyer
shall execute and deliver a "Harvest Completion Letter" substantially in the
form of that attached hereto as Exhibit D, which letter shall be accompanied
by any amounts payable by Buyer with respect to unfulfilled post-harvest
obligations which Seller has agreed to perform or cause to be performed.
Delivery of such letter, and acceptance thereof by Seller, shall release
Buyer from any further liability hereunder with respect to Buyer's
obligations under this Agreement as to (i) severing, removing and paying for
the Timber pertaining to the Tract at issue and (ii) post-harvest clean-up
and site restoration of such Tract, except as may later arise under Section
5.07 regarding environmental matters.
ARTICLE VI
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COVENANTS AND AGREEMENTS OF SELLER
----------------------------------
6.01 Seller covenants and agrees that it is seized of fee simple or
leasehold title to the Timberlands and that it has the right to grant and
convey the right to harvest the Timber.
6.02 Seller shall hold Buyer harmless against any Person claiming by,
through or under Seller who may assert against Buyer any claim of title to
the Timberlands or the Timber.
ARTICLE VII
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COVENANTS AND AGREEMENTS OF BUYER
---------------------------------
7.01 HOLD HARMLESS. Buyer shall defend, indemnify and save harmless
Seller, its directors, officers, employees and agents against any and all
loss, expenses, damages, claims,
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fines, charges, liens, liabilities, actions, causes of action or proceedings of
any kind whatsoever (whether or not arising on account of damage to or loss of
property, or injury to or death of any person) arising directly or indirectly
out of or in connection with performance by or on behalf of Buyer of any of its
obligations, operations or activities hereunder, except those caused solely by
any such indemnified party's negligence. The foregoing includes, without
limitations, any claim for injury to persons or property, timber trespass,
nuisance, mechanics' and materialmen's liens, workers' compensation or
unemployment taxes, and any fines and penalties. Buyer shall perform all its
obligations and carry on all its operations and activities hereunder as an
independent contractor and entirely at its own risk and responsibility. Buyer
shall be responsible for activities of its subcontractors. Buyer will reimburse
Seller, its directors, officers, employees or agents for all costs reasonably
incurred by any such parties in defending against such claims through their
attorney(s) of choice.
7.02 DAMAGE TO PROPERTY. Buyer shall pay for all material damage to
Seller's property and any damage to the property of any third parties
resulting directly or indirectly from negligent acts or omissions by Buyer,
its employees, agents or contractors in performing this Agreement.
7.03 INSURANCE. At all times during the term of this Agreement and
any extension thereof or until all work required by this Agreement is
completed, Buyer shall, at its sole cost, maintain in effect:
(a) Commercial general liability insurance with aggregate
coverage not less than $20,000,000 covering its harvesting activities.
The limit of liability shall be at least $1,000,000 per occurrence and
may be provided, in part, by umbrella or excess liability policies.
(b) Motor vehicle liability insurance covering all vehicles
used in operations under this Agreement, or used upon or in connection
with the harvest of timber on or from Seller's land. The policy shall
have a limit of liability not less than $1,000,000 per occurrence.
(c) Workers compensation insurance meeting statutory
requirements for all Buyer's employees, and shall require Buyer's
contractors and subcontractors to have workers compensation insurance
involved in any operation hereunder.
All policies of insurance shall be placed with financially sound, commercial
insurers licensed to do business in the states in which the Timberlands are
situated; provided, however, Buyer may satisfy the obligations of this
Section 7.03 by a plan of self-insurance. All policies of insurance shall
provide that Seller shall be given thirty (30) days' prior notice of material
change or cancellation of coverage, and shall name Seller and Rayonier Forest
Resources Company and their respective directors, officers, employees and
agents as insured parties thereunder. This
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notice provision shall be without qualification. Buyer shall on or prior to the
closing date, and prior to each policy renewal, furnish to Seller certificates
of insurance or other evidence satisfactory to Seller that insurance complying
with all of the above requirements is in effect.
ARTICLE VIII
TERM; TERMINATION
8.01 TERM. Subject to termination as provided in Section 8.02, the
term of this Agreement shall be, and this Agreement shall continue in full
force and effect from the date hereof until the last cutting period described
in Section 4.06, including any extension thereof, has been completed.
8.02 TERMINATION. This Agreement may be terminated in the following
manner:
(a) at any time by the mutual written agreement of the parties;
(b) by either party following a breach by the defaulting party
of any of its monetary obligations hereunder, by giving written notice
of such breach to the defaulting party, and the continuing failure by
the defaulting party to cure such breach in all material respects for a
period of ten (10) days after the receipt of such notice, following
which the nondefaulting party will have no further obligations
hereunder; or
(c) by either party at any time following a material breach by
the defaulting party of any of its other obligations hereunder, by
giving written notice of such breach to the defaulting party, and the
continued failure by the defaulting party to cure such breach in all
material respects for a period of thirty (30) days, provided that if
the breach is not reasonably susceptible of cure within thirty (30)
days, such defaulting party shall have such additional time (not to
exceed sixty [60] days from the date of such notice of breach) as long
as the defaulting party initiates such cure within the thirty (30)-day
period and diligently pursues completion of the cure, following which
termination the nondefaulting party shall have no further obligations
hereunder.
Termination shall not relieve a defaulting party of any liability to the
nondefaulting party for breach of its obligations hereunder. The provisions
of Article IX shall survive any termination of this Agreement.
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ARTICLE IX
DISPUTE RESOLUTION
9.01 CONSULTATION BY SENIOR EXECUTIVES. In the event of any Dispute,
each of the parties will cause its chief operating officer in charge of the
Timberlands (or his or her designee) in the case of Seller, and in charge of
wood procurement for the Mills (or his or her designee) in the case of Buyer,
to consult with each other promptly and in good faith to endeavor to resolve
such Dispute before seeking arbitration as provided in Section 9.02, but
failure to do so shall not limit the right of either party to submit the
issue to such arbitration.
9.02 ARBITRATION. Any Dispute not settled in accordance with the
procedures set forth in Section 9.01 shall, at the request of either party,
be settled by binding arbitration in accordance with the Commercial
Arbitration Rules of the American Arbitration Association then in effect (the
"Rules"), except as the Rules may be modified by this Section 9.02.
(a) The arbitration shall be held in Atlanta, Georgia. There
shall be three arbitrators, of whom each party shall select one. The
party-appointed arbitrators shall select the third arbitrator. Each of
the arbitrators shall be a lawyer with at least 10 years' experience
in commercial matters and shall have experience in the forest products
area.
(b) The arbitrators shall decide the matters in dispute in
accordance with the laws of the state in which the Timber or Tract at
issue is situated, without reference to the conflict of laws rules
thereof. The arbitration shall be governed by the Federal Arbitration
Act.
(c) The hearing shall be commenced within sixty (60) days and
the award shall be rendered no later than one hundred twenty (120) days
following the appointment of the last of the three arbitrators. All
discovery shall be completed no later than twenty (20) days prior to
the commencement of the hearing.
(d) Consistent with the expedited nature of arbitration, each
party will, upon the written request of the other party, provide the
other with copies of documents in its possession, custody or control
relevant to the issues raised by any claim or counterclaim. Other
discovery may be agreed by the parties or ordered by the arbitrators to
the extent the arbitrators deem additional discovery relevant and
appropriate, and any dispute regarding discovery, including disputes as
to the need therefor or the relevance or scope thereof, shall be
determined by the arbitrators, which determination shall be conclusive.
(e) The parties and the arbitrators shall treat the
proceedings, any related discovery and the decisions of the arbitral
tribunal as confidential, except in connection with a judicial
challenge to, or enforcement of, an award, and unless otherwise
required by law.
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(f) Any claim by either party, shall be time barred unless the
asserting party makes a demand for arbitration with respect to such
claim within the applicable statute of limitations except to the extent
otherwise provided in this Agreement. Any dispute as to the timeliness
of such demand or other statute of limitations issues shall be decided
by the arbitrators.
(g) The award of the arbitrators shall be final and binding and
shall be the sole and exclusive remedy between the parties regarding
any claim, counterclaims, issues, or accounting presented to the
tribunal. The arbitrators' award shall state the reasons on which the
award is based. Any monetary award shall include interest from the
date of any breach of or other violation of this Agreement to the date
of which the award is paid, at a rate to be determined by the
arbitrators. Judgment upon the award rendered by the arbitrators may
be entered by any court having jurisdiction thereof. Each of the
parties hereby consents to service of process by registered mail, by
receipted Federal Express or other courier delivery, or by personal
delivery at its address set forth below and agrees that its submission
to jurisdiction and its consent to service of process by mail is made
for the express benefit of the other party.
(h) This agreement to arbitrate shall be binding upon the
successors and assigns and any trustee or receiver, of each party,
provided that nothing contained in this Section 9.02 shall limit the
right of either party, or any of their respective Affiliates,
successors, or assigns, at its election, to seek equitable remedies in
a court of equity or law in the event of a breach or threatened breach
hereof, without first proceeding under this Section 9.02.
ARTICLE X
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MISCELLANEOUS
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10.01 ENTIRE AGREEMENT. This Agreement (including the Exhibits
attached hereto or referred to herein and the Designation and Pricing Forms
executed under Section 4.05) constitutes the entire agreement among the
parties with respect to the subject matter hereof and supersedes any prior
understandings, agreements, or representations by or among the parties,
written or oral, to the extent they related in any way to the subject matter
hereof.
10.02 NO THIRD-PARTY BENEFICIARIES. Except as otherwise expressly
provided for in this Agreement, nothing in this Agreement, express or
implied, is intended or shall be construed to confer upon or give to any
employee of Seller or Buyer or any other Person, other than the parties
hereto (and their successors and permitted assigns), any rights, remedies
or other benefits under or by reason of this Agreement.
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10.03 SUCCESSION AND ASSIGNMENT. This Agreement shall be binding upon
and inure to the benefit of the parties named herein and their respective
successors and permitted assigns. No party may assign either this Agreement
or any of its rights, interests, or obligations hereunder without the prior
written consent of the other party, which consent shall not be unreasonably
withheld or delayed, except as follows:
(a) Assignment by Seller. Except as provided in this Section
10.03, this Agreement may not be assigned by Seller in whole or in
part. Notwithstanding the foregoing, at any time during the Term,
Seller may assign this Agreement: upon prior written notice to Buyer,
to any Person (i) (1) that is and at all times remains an Affiliate or
subsidiary of Seller, or that merges or consolidates with or into
Seller, or that acquires all or substantially all of the assets of
Seller or (2) that is a third party purchaser for value of the
Timberlands, or any portion thereof, and (ii) that assumes all
liabilities and obligations of Seller under this Agreement pursuant to
an instrument in form and substance reasonably satisfactory to Buyer.
In addition to the foregoing, Seller may assign this Agreement as
security for obligations to any lender in respect of financial
arrangements of Seller. In the event of any assignment or assumption
contemplated by clauses (1) and (2) above, with respect to whom all
liabilities and obligations of Seller under this Agreement are
expressly assumed in writing, Seller shall be released from any and all
liability under this Agreement that accrues prior to the date of such
assignment and assumption; provided, however, any such release of
Seller shall be conditioned upon there being provided to Buyer
reasonable assurances that Seller's assignee (or an agent or contractor
of such assignee) is capable of performing Seller's duties and
obligations under this Agreement and such assignee has agreed to
perform such duties and obligations. Seller hereby covenants and
agrees that it shall not sell or transfer its interest in the Timber or
the Timberlands in violation of the provisions of those certain
promissory notes more particularly identified and described on Exhibit
E attached hereto and incorporated herein by this reference, so long
as any of such promissory notes remained issued and outstanding, nor
shall Seller sell all or any portion of the Timberlands the effect of
which would have a material adverse effect on the geographic mix of
Timber with respect to the region within which such Timber or Tracts
are located. Any purported assignment of transfer of this Agreement in
violation of this Section 10.04(a) shall be void and of no force or
effect.
(b) Assignment by Buyer. Except as provided in this Section
10.04, this Agreement may not be assigned by Buyer in whole or in
part. Notwithstanding the foregoing, at any time during the Term,
Buyer may assign this Agreement, in whole or in part, (i) as security
for obligations to such lenders in respect of financing arrangements of
Buyer, (ii) upon prior written notice to Seller, to any Person (a) that
is and at all times remains an Affiliate of Buyer controlled by Buyer,
or that merges or consolidates with or into Buyer or that acquires all
or substantially all of the assets of Buyer, including the Mill, and
(b) that assumes all liabilities and obligations of Buyer under this
Agreement
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pursuant to an instrument in form and substance reasonably satisfactory to
Seller, or (iii) to any purchaser, lessee or operator of one of the Mills,
whether or not affiliated with Buyer. No such assignment or assumption
pursuant to the preceding sentence shall in any way affect the liabilities
or obligations of Buyer under this Agreement, and in the event of any such
assignment or assumption, Buyer shall remain fully liable for its
liabilities and obligations under this Agreement. Any purported assignment
or transfer of this Agreement in violation of this Section 10.03 shall be
void and of no force or effect.
10.04 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, and by any party on separate counterparts, each of which as so
executed and delivered shall be deemed an original, but all of which together
shall constitute one and the same instrument, and it shall not be necessary
in making proof of this Agreement as to any party hereto to produce or
account for more than one such counterpart executed and delivered by such
party.
10.05 HEADINGS. The Article and Section headings contained in this
Agreement are inserted for convenience only and shall not affect in any way
the meaning or interpretation of this Agreement.
10.06 NOTICES. All notices, certificates, requests, demands, claims,
and other communications hereunder shall be given in writing and shall be
delivered personally (including by personal courier or delivery service) or
sent by facsimile or telegram or by registered or certified mail (return
receipt requested), postage prepaid, to the parties at the following address
(or at such other addresses as shall be specified by like notice):
If to Buyer: Copy To:
------------ --------
John E. Davis John F. Allgood
Smurfit-Stone Container Assistant Secretary and Regional
Corporation Counsel
P.O. Box 457 Smurfit-Stone Container
Fernandina Beach, Florida 32035 Corporation
1979 Lakeside Parkway
Suite 300
Tucker, Georgia 30084
If to Seller:
--------------
Rayonier Southeast Forest Resources
Post Office Box 728
Fernandina Beach, Florida 32035-0728
Attention: Mr. W. D. Ericksen
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Copies of any and all notices, requests, demands, claims or other
communications of a legal nature (as distinguished from those undertaken in
the ordinary course of business) shall be delivered to:
Rayonier Inc.
1177 Summer Street
Stamford, Connecticut 06905-5529
Attention: Ms. Lisa M. Palumbo
General Counsel
Any notice given personally or by mail or telegram shall be effective when
received. Any notice given by facsimile shall be effective when the
appropriate facsimile answer back is received.
10.07 GOVERNING LAW. This Agreement shall be governed by and construed
in accordance with the laws of the state in which the Timber or Tract at
issue is situated as to all matters, including but not limited to matters of
validity, construction, effect, performance and remedies (without giving
effect to any choice or conflict of law, provision or rule, whether such
state or any other jurisdiction, that would cause the application of the laws
of any jurisdiction other than such state).
10.08 AMENDMENTS AND WAIVERS. No amendment of any provision of this
Agreement shall be valid unless the same shall be in writing and signed by
the Seller and the Buyer. Either party hereto may, by written notice to the
other party, waive any provision of this Agreement. No waiver by any party
of any default, misrepresentation, or breach of warranty or covenant
hereunder, whether intentional or not, shall be deemed to extend to any prior
or subsequent default, misrepresentation, or breach of warranty or covenant
hereunder or affect in any way any rights arising by virtue of any prior or
subsequent such occurrence.
10.09 SEVERABILITY. The provisions of this Agreement shall be deemed
severable and any term or provision of this Agreement that is invalid or
unenforceable in any situation in any jurisdiction shall not affect the
validity or enforceability of the remaining terms and provisions hereof. If
any provision of this Agreement or the application thereof to any Person or
entity or any circumstance, is invalid or unenforceable, (i) a suitable
provision shall be substituted therefor in order to carry out, so far as may
be valid and enforceable, the intent and purpose of such invalid or
unenforceable provision, and (ii) the remainder of this Agreement and the
application of such provision to other persons, entities or circumstances
shall not be affected by such invalidity or unenforceability, nor shall such
invalidity or unenforceability affect the validity or enforceability of such
provision, or the application thereof, in any other jurisdiction.
10.10 EXPENSES. Except as otherwise expressly provided in this
Agreement, whether or not the transactions contemplated by this Agreement are
consummated, each of the parties will bear its own costs and expenses
(including, but not limited to, all compensation and expenses of
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counsel, financial advisors, consultants, actuaries and independent accountants)
incurred in connection with this Agreement and the transactions contemplated
hereby.
10.11 CONSTRUCTION. The parties have participated jointly in the
negotiation and drafting of this Agreement. In the event an ambiguity or
question of intent or interpretation arises, this Agreement shall be
construed as if drafted jointly by the parties and no presumption or burden
of proof shall arise favoring or disfavoring any party by virtue of the
authorship of any of the provisions of this Agreement. Any reference to any
federal, state, local, or foreign statute or law shall be deemed also to
refer to all rules and regulations promulgated thereunder, unless the
context requires otherwise. The word "including" shall mean including
without limitation. The parties intend that each provision contained herein
shall have independent significance. If any party has breached any agreement
contained herein in any respect, the fact that there exists another provision
relating to the same subject matter (regardless of the relative levels of
specificity) which the party has not breached shall not detract from or
mitigate the fact that the party is in breach of the first representation,
warranty, or covenant.
10.12 INCORPORATION OF EXHIBITS. The Exhibits identified in this
Agreement are incorporated herein by reference and made a part hereof.
10.13 PERFORMANCE. Each of the parties acknowledges and agrees that
the other party would be damaged irreparably in the event any of the
provisions of this Agreement are not performed in accordance with their
specific terms or otherwise are breached. Accordingly, each of the parties
agrees that the other party shall be entitled to an injunction or injunctions
to prevent breaches of the provisions of this Agreement and to enforce
specifically this Agreement and the terms and provisions hereof in any action
instituted in any court of the United States or any state thereof having
jurisdiction over the parties and the matter (subject to the provisions set
forth in Section 10.14 below), in addition to any other remedy to which they
may be entitled, at law or in equity.
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10.14 SUBMISSION TO JURISDICTION. WITHOUT LIMITING THE PARTIES'
AGREEMENT TO SUBMIT ANY AND ALL DISPUTES TO ARBITRATION AS HEREIN PROVIDED,
IF, NOTWITHSTANDING SAID SECTION, ANY PARTY SHALL HAVE THE RIGHT TO SEEK
RECOURSE TO A COURT WITH RESPECT TO ANY DISPUTE ARISING OUT OF OR RELATED TO
THIS AGREEMENT OR THE TRANSACTIONS CONTAINED IN OR CONTEMPLATED BY THIS
AGREEMENT, WHETHER IN TORT OR CONTRACT OR AT LAW OR IN EQUITY, THEN ANY
ACTION OR PROCEEDING IN RESPECT OF ANY SUCH DISPUTE SHALL BE BROUGHT
EXCLUSIVELY IN ANY UNITED STATES DISTRICT COURT LOCATED IN THE STATE OF
GOVERNING LAW (AS SET FORTH IN SECTION 10.07) (THE "JURISDICTIONAL STATE") OR
THE STATE COURTS OF THE JURISDICTIONAL STATE ( THE "CHOSEN COURTS") AND WITH
RESPECT TO ANY SUCH ACTION EACH PARTY (I) IRREVOCABLY SUBMITS TO THE
EXCLUSIVE JURISDICTION OF THE CHOSEN COURTS FOR SUCH PURPOSES, (II) WAIVES
ANY OBJECTION TO LAYING VENUE IN ANY SUCH ACTION OR PROCEEDING IN THE CHOSEN
COURTS, (III) WAIVES ANY OBJECTION THAT THE CHOSEN COURTS ARE AN INCONVENIENT
FORUM OR DO NOT HAVE JURISDICTION OVER ANY PARTY HERETO AND (IV) AGREES THAT
SERVICE OF PROCESS UPON SUCH PARTY IN ANY SUCH ACTION OR PROCEEDING SHALL BE
EFFECTIVE IF NOTICE IS GIVEN IN ACCORDANCE WITH SECTION 10.06 OF THIS
AGREEMENT. EACH PARTY AGREES THAT A FINAL JUDGMENT IN ANY ACTION OR
PROCEEDING SO BROUGHT SHALL BE CONCLUSIVE AND MAY BE ENFORCED BY SUIT ON THE
JUDGMENT OR IN ANY OTHER MANNER PROVIDED BY LAW OR AT EQUITY. EACH PARTY
ALSO AGREES NOT TO BRING ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING
TO THIS AGREEMENT IN ANY OTHER COURT. BUYER IRREVOCABLY DESIGNATES JOHN F.
ALLGOOD AS ITS AGENT AND ATTORNEY-IN-FACT FOR THE ACCEPTANCE OF SERVICE OF
PROCESS ON ITS BEHALF IN ANY SUCH CLAIM OR PROCEEDING AND TAKING ALL SUCH
ACTS AS MAY BE NECESSARY OR APPROPRIATE IN ORDER TO CONFER JURISDICTION OVER
IT UPON THE CHOSEN COURTS AND THE BUYER STIPULATES THAT SUCH CONSENT AND
APPOINTMENT IS IRREVOCABLE AND COUPLED WITH AN INTEREST. SELLER IRREVOCABLY
DESIGNATES LISA M. PALUMBO AS ITS AGENT AND ATTORNEY-IN-FACT FOR THE
ACCEPTANCE OF SERVICE OF PROCESS IN ANY SUCH CLAIM OR PROCEEDING AND TAKING
ALL SUCH ACTS AS MAY BE NECESSARY OR APPROPRIATE IN ORDER TO CONFER
JURISDICTION OVER IT UPON THE CHOSEN COURTS AND SELLER STIPULATES THAT SUCH
CONSENT AND APPOINTMENT IS IRREVOCABLE AND COUPLED WITH AN INTEREST.
10.15 FULFILLMENT OF OBLIGATIONS. Any obligation of any party to any
other party under this Agreement, which obligation is performed, satisfied or
fulfilled by an Affiliate of such party, shall be deemed to have been
performed, satisfied or fulfilled by such party.
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10.16 RECORDABILITY. Seller and Buyer agree that this Agreement shall
not be recorded in the public records of any county wherein the Timber is
located; provided, however, Seller and Buyer agree that a notice of this
Agreement in a form substantially similar to that document attached hereto as
Exhibit D may be recorded.
10.17 LEGAL COMPLIANCE. Buyer shall promptly report to Seller
any observed marijuana or suspected marijuana growing on or about any Tract
with respect to which Buyer is conducting logging operations.
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IN WITNESS WHEREOF, Seller and Buyer have each caused this Timber
Cutting Agreement to be executed by their duly authorized officers, each as
of the date first above written.
SELLER:
Date of execution: 10/25/99 R (1999) TIMBERLANDS LLC
By: Rayonier Timberlands Management, Inc.,
A Delaware corporation, its Managing
General Partner
By: /s/ James M. Rutledge
----------------------
Title: Treasurer
--------------
Date of execution: 10/25/99 RAYONIER TIMBERLANDS OPERATING
COMPANY, L.P.
By: Rayonier Timberlands Operating Company, L.P.
A Delaware limited partnership, its sole
member
By: Rayonier Timberlands Management Inc., a
Delaware corporation, its Managing
General Partner
By: /s/ James M. Rutledge
-----------------------
Title: Treasurer
---------------
BUYER:
Date of execution: 10/25/99 JEFFERSON SMURFIT CORPORATION (U.S.)
By: /s/ Leslie T. Lederer
----------------------
Title: Vice President
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EXHIBIT 23
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in the Registration Statement (Form
S-3 No. 333-52857) of Rayonier Inc. and in the related Prospectus of our report
dated September 15, 1999, except for Note 8, as to which the date is October
25, 1999 with respect to the financial statements of Smurfit Timberlands
Operations, a business unit of Jefferson Smurfit Corporation (U.S.) included in
the Current Report on Amendment No. 1 to Form 8-K/A dated November 12, 1999 of
Rayonier Inc., filed with the Securities and Exchange Commission.
/s/ Ernst & Young LLP
November 10, 1999
St. Louis, Missouri
